The Saturday Morning Post: Quick hits on politics & more in RIMay 26th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site, The Saturday Morning Post
1. The politics of 38 Studios are getting complicated. Last week, Lincoln Chafee looked like the big winner – he was Rhode Island’s Cassandra, the one who tried and failed to warn his state off blowing $90 million on an ex-pitcher’s dreams of gaming glory. Now, though, tough questions are starting to be asked about whether Chafee made a bad situation even worse. The most damaging event was CVS executive Helena Foulkes‘ abrupt resignation from the EDC board on Thursday. Foulkes is one of the most respected business leaders in Rhode Island. She didn’t vote for the 38 Studios deal; Chafee himself put her on the board as his vice chair. (The governor is the chair.) Foulkes didn’t need to save face by fixing a botched deal she supported; the fact that she apparently had such significant disagreements with Chafee that she had to resign will make neutral parties more open to the criticisms of Treasurer Raimondo and others with an anti-Chafee axe to grind.
2. Raimondo, though, is walking a very fine line – claiming she’s above “politics as usual” while simultaneously using her political capital to not-so-subtly shift public blame from Carcieri, Schilling and Keith Stokes to Chafee. If she’s confident in her critique, she should just offer it forthrightly.
3. It’s a bit astonishing how many 38 Studios workers are blaming Chafee, rather than Curt Schilling and their other bosses, for the rapid and sudden demise of 38 Studios. As Josh Barro tweeted: “38 Studios employee tells @white_tim the company could’ve been saved with tax credits. Well, enough free government money can save any company.” Chafee’s indiscreet public comments since May 14 haven’t helped, and we still don’t know what the state considered doing for the firm. But 38 Studios is a private-sector enterprise; it shouldn’t be up to Rhode Island’s government to make its business plan work. And it’s worth recalling that Schilling could never attract private investors.
4. If Chafee doesn’t become a Democrat, at least one of his 2014 campaign ads pretty much writes itself: “When 38 Studios collapsed, Rhode Islanders were left on the hook for $90 million. Who approved the loan program? Democrats in the General Assembly. Who gave the money to Curt Schilling? A Republican governor. It was the independent, the man without a party, who said no.” (No, he wasn’t the only one, but details rarely get in the way of a good campaign spot.)
5. You won’t believe this anecdote, but I swear it’s true. After Nneka Nwosu left me on my own at the State House following Friday’s 6 p.m. newscast, I was the last one in the State Room at the State House. While I was typing away a young state employee came in and started folding up the chairs that had been set out. He asked me what we’d been doing and I said it was a press conference about the problems with 38 Studios. “It really sucks,” he said. “I loved the game.” Yep – turned out this state employee paid $60 (plus, possibly, his future tax dollars) for “Reckoning,” and was a big fan.
6. What about making Ken Block executive director of the R.I. Economic Development Corporation? The Moderate Party founder is a successful businessman full of ideas for the public sector, and he was against 38 Studios from the start. He’s also a rare voice of dissent on the Knowledge District, though, so Senate President Paiva Weed might refuse to confirm him.
7. The 38 Studios bonds will cost nearly $90 million to pay off between now and 2020, but the final bill might be lower. In addition to selling off the company’s assets and putting some of those proceeds towards the loan, Rhode Island could try and restructure the debt below the current 6% to 7.75% interest rates they’re carrying.
8. A loyal Saturday Morning Post reader pointed out that for the same amount of money Rhode Island guaranteed for 38 Studios – $75 million – NASA funded the development of SpaceX’s new astronaut escape system. Another writes in: “What is the state doing with the earnings gained through RI-resident lottery winners? … While $17 million isn’t $75 million, I think it wouldn’t hurt to set it aside for the debt caused by 38 Studios.” Interesting idea, no?
9. Not all the business news in Rhode Island is bad. Providence Equity Partners has raised more than $4 billion for its latest investment fund, more than two-thirds of the way to its $6 billion. ProvEq’s Jonathan Nelson, the richest man in Rhode Island, is among those who advised Chafee about 38 Studios’ prospects in recent weeks. (Too bad the company doesn’t employ many people here.) More than one tech executive also pointed out to me the fact that there are so many job openings locally and nationally for 38 Studios’ workers, a sign that employees with certain skills are in demand even in an age of high unemployment.
10. Kudos to Anchor Rising’s Monique Chartier and Andrew Morse, who are doing yeoman’s work tracking all the financial machinations in Woonsocket; Revenue Director Rosemary Booth Gallogly told reporters Thursday she’s strongly considering putting Woonsocket’s finances under formal state oversight, just like bankrupt Central Falls and East Providence. And over at Rhode Island’s Future, Bob Plain was the first to report the city’s delegation wants a receiver. It’s all a good reason for you to make donations to both Anchor Rising and Rhode Island’s Future – the state benefits from a robust blogosphere.
11. There’s plenty of speculation about who’ll succeed Gordon Fox as speaker of the House, centering primarily on J. Patrick O’Neill and Helio Melo. You hear much less talk about who’ll take over for Teresa Paiva Weed as Senate president, even though she’s been in her job since 2009 and is widely believed to covet a judgeship. Is Dominick Ruggerio damaged goods after his DUI? Could it be Maryellen Goodwin, Dan DaPonte or Josh Miller?
12. This week on “Newsmakers” – Democratic congressional candidate Anthony Gemma. Watch Sunday at 10 a.m. on Fox Providence. See you back here next Saturday morning, and have a wonderful Memorial Day weekend.
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