​By Dan McGowan

PROVIDENCE, R.I. (WPRI) – Former Red Sox pitcher Curt Schilling and three other former 38 Studios executives will be allowed to access $2 million in insurance money that could have gone to creditors in the company’s bankruptcy case to help cover defense costs in a lawsuit filed by the R.I. Economic Development Corporation, according to a review of court documents by WPRI.com.

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• Related: Trial over 38 Studios deal with RI may be a year away (Jan. 25)

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – It could be at least a year before Rhode Island’s lawsuit against Curt Schilling and other architects of the 38 Studios deal goes to trial.

Read the rest of this story »

• Related: Target 12: EDC ignored signs of risks on 38 Studios (Nov. 20)

He struck out as a businessman, but Curt Schilling still has a chance to land among baseball’s immortals.

Schilling is one of 24 players who are on the Hall of Fame ballot for the first time this year, ESPN reports. The Baseball Writers’ Association of America will vote through next month, with the results announced Jan. 9.

And while Schilling may be persona non grata in Rhode Island because of the 38 Studios debacle, he’s got at least one local sportswriter in his corner – The Providence Journal’s Brian MacPherson:

The numbers Schilling compiled in his 20-season career — especially with his postseason exploits, particularly his memorable “Bloody Sox” start in 2004 — put him squarely in the middle of the in-or-out gray area.

Schilling won 216 games and compiled a 3.46 ERA in his career. His win total ranks him in a tie with Wilbur Cooper and Charlie Hough for 82nd all-time, and his ERA ranks him 391st all-time — on its face, certainly not Hall of Fame-caliber.

More relevant than his ERA, however, might be his adjusted ERA+ — a number that takes into consideration that Schilling pitched in the middle of the Steroid Era and its accompanying offensive inflation.

• Related: Schilling selling Mass. home for $3.5M after 38 Studios collapse (Oct. 2)

By Tim White

MEDFIELD, Mass. (WPRI) – Former Red Sox pitcher Curt Schilling has put his 26-acre property outside Boston on the market and is seeking nearly $3.5 million, less than four months after his taxpayer-backed company 38 Studios filed for bankruptcy.

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Update: Boston magazine’s Jason Schwartz tweets:

Full circle alert: Schilling was hosting a fundraiser at that house when he met RI Gov Carcieri & they got ball rolling on #38Studios deal.

— Jason Schwartz (@SchwartzHub) October 2, 2012

• Related: Schilling talks 38 Studios tonight in ESPN documentary ‘Broke’ (Oct. 2)

What’s it like for a pro athlete to go broke? ESPN decided to ask Curt Schilling.

Schilling will discuss how he was impacted by the recent collapse of 38 Studios, his taxpayer-backed video game company, in the new ESPN documentary “Broke,” which airs tonight at 8 p.m. to kick off the new season of the sports network’s 30 for 30 documentary series.

“Broke” director Billy Corben told The Wall Street Journal the documentary offers a “step by step guide on how to go broke” by telling the stories of athletes including Bernie Kosar, Andre Rison, Cliff Floyd and Schilling. “I never believed that you could beat me,” Schilling says in the preview. “I lost.”

Here’s a quick preview of “Broke” from the director:

The announcement that Electronic Arts’ “Star Wars: The Old Republic” – which, like defunct 38 Studios’ Project Copernicus, is a massively multiplayer online game (MMO) – will become free-to-play signals a major shift in the game industry. And it also raises a question: Would 38 Studios actually have been able to charge for Project Coperncius when it came out next year?

Turns out, that was no longer the company’s plan. Boston magazine’s Jason Schwartz (whose autopsy of 38 Studios is a must-read) explains why based on his interviews with Schilling:

When I talked to Schilling for my story breaking down 38 Studios’ crash, he told me that the company’s plan was to make Copernicus free to play and to seek revenue from within the game, the same way EA is attempting with Old Republic.

“We were going to be the first triple-A, hundred-million-dollar-plus, free-to-play, micro-transaction-based MMO. That was one of our big secrets,” Schilling told me. “I think when we eventually showed off the game for the first time, the atom bomb was going to be free-to-play. When we announced that at the end, that was gonna be the thing that, I think, shocked the world.”

Read the rest here.

• Related: Watch Newsmakers with Boston magazine’s Jason Schwartz (July 29)

Curt Schilling is back on cable TV.

Schilling returned to his job as an analyst on ESPN’s “Baseball Tonight” program during Sunday evening’s broadcast, ESPN spokesman Ben Cafardo confirmed in an email to WPRI.com.

“He will appear regularly,” Cafardo said.

Schilling disappeared from ESPN in early May as 38 Studios’ troubles emerged into public view, then returned to the network June 3. The company filed for bankruptcy later that week, and ESPN announced June 16 that the former Red Sox ace would take a leave of absence from the sports network “as he works thru his business issues.”

Schilling has been an analyst on “Baseball Tonight” program since the 2010 season.

• Related: Schilling holds onto job as ESPN analyst amid 38 Studios woes (May 24)

(photo: ESPN)

• Related: Exposé blames Schilling for 38 Studios mismanagement, costs (July 23)

By Ted Nesi

BROOKLINE, Mass. (WPRI) – Bank Rhode Island may lose as much as $4.2 million on loans that were apparently given to 38 Studios in exchange for tax credits Curt Schilling’s firm never received, its parent company announced Thursday.

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Richard Bready

Boston magazine’s Jason Schwartz thinks so:

When I interviewed Schilling for my story on 38 Studios, he declined to speak on the record about who the investor was. But when I followed up via text shortly after, he replied that his name was, “Rick Brady.” Schilling added, “That was the investor who was willing and able to write the check as long as the gov permitted tax credits.”

Now, so far as I can tell, there aren’t any ridiculously wealthy Rick Brady’s hanging around Providence. But there is a very wealthy Rick Bready (pronounced “Brady”) and it would be a pretty safe bet that he’s the person Schilling was referring to.

Bready retired last year after 36 years at Nortek, having led the company through a bankruptcy restructuring; a 2003 leveraged buyout left the company with a heavy debt load. It’s certainly plausible he had the cash: Bready’s seaside estate in Newport alone is assessed at $18.6 million, according to city records, and his annual salary was $3.5 million a year from 2008 to 2010. He’s also on Roger Williams University’s board.

Also, Schwartz will join us on Newsmakers this weekend to discuss his big 38 Studios article.

By Ted Nesi and Tim White

PROVIDENCE, R.I. (WPRI) – Curt Schilling’s video game company 38 Studios blew through more than $133 million before it collapsed into bankruptcy last month, according to documents newly obtained by WPRI.com.

The documents obtained by WPRI.com also raise new questions about whether 38 Studios executives were overoptimistic about the company’s prospects. Their business plan projected the company would take in $109 million in revenue over the course of this year.

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What was Governor Carcieri thinking?

That and a lot of head-shaking will likely be most Rhode Islanders’ reactions to “End Game,” Boston magazine’s 5,000-word autopsy of what went wrong at 38 Studios, out this afternoon. Jason Schwartz uses a two-hour interview with Schilling, private Facebook messages and other sources to paint a vivid picture of a company that was never ready for prime time.

Schilling’s overconfidence and lavish spending, combined with dysfunctional management and – crucially – a high-risk business plan, created a situation that’s almost impossible to imagine ending well. The problems were already evident to one venture capitalist who vetted the firm before Carcieri and Schilling started talks in March 2010 and told Schwartz 38 Studios didn’t have “the ‘A’ team that I thought you’d want to see.”

Schilling estimated the game’s development would cost $50 million at most; the company had spent more than $100 million by the time it collapsed, partly because the EDC deal forced it to go on a “hiring binge.” The comments from one of 38 Studios’ potential partners are lukewarm, and Schilling himself declares that the game itself “wasn’t fun” – a worrying review considering the EDC wants to sell it to recoup some of taxpayers’ losses.

These paragraphs sum up the magazine’s findings well:

Given the warning signs flashing around 38 Studios, it remains difficult to understand why Rhode Island so freely handed over $75 million. But for Schilling, despite being a longtime proponent of small government, the guaranteed loan was a godsend. He’d get the cash without having to give up even the tiniest slice of ownership. And if everything went bust, it would be Rhode Island that was responsible for the money. …

Schilling, meanwhile, kept up his free-spending ways. This past Christmas, he personally bought every staffer a computer tote bag with the 38 Studios logo. Add in the company’s high staffing levels, frequent gratis lunches and dinners, and big travel budget, and it was easy to forget the whole thing was a startup. “We never had that sense of urgency or panic,” Schilling tells me. “I think there was a sense of invulnerability — I don’t want to say invulnerability, but I think we were comfortable.”

Read the rest here.

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Curt Schilling’s wife took to Facebook on Friday to slam Gov. Lincoln Chafee for his handling of the crisis that led to 38 Studios’ bankruptcy and to critique the media’s coverage of the company.

Curt Schilling soon followed suit with his own Facebook post responding to a new Associated Press story about emails that suggest 38 Studios failed to provide the EDC with timely access to its financial statements in May despite repeated requests by a state lawyer on behalf of auditors from Deloitte.

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By Ted Nesi and Tim White

PROVIDENCE, R.I. (WPRI) – House Speaker Gordon Fox on Friday denied that he pushed lawmakers to create a new $125 million loan program in 2010 knowing the R.I. Economic Development Corporation planned to pledge $75 million of the money to Curt Schilling’s 38 Studios.

In his first extended broadcast interview since 38 Studios’ demise, Fox told WPRI 12 about an April meeting where Schilling and Tom Zaccagnino, a 38 Studios board member, asked Gov. Lincoln Chafee to sign two consent agreements, one allowing the company to get tax credits and another to provide bridge financing.

Fox didn’t rule out the possibility that Rhode Island will opt to default on the $75 million moral-obligation bonds the EDC issued for 38 Studios, which are not legal obligations of the state and could require lawmakers to appropriate more than $12 million a year for bondholders through 2020.

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By Ted Nesi

PROVIDENCE, R.I. (WPRI) - The R.I. Economic Development Corporation has hired a special counsel, Max Wistow, to examine whether taxpayers have legal avenues to claw back some of the tens of millions of dollars they’re poised to lose after the collapse of Curt Schilling’s video game company, 38 Studios.

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Curt Schilling gave his first live interview since 38 Studios collapsed on WEEI’s “Dennis and Callahan” show Friday morning, taking some blame its demise while placing significant responsibility on the shoulders of Governor Chafee for allegedly scaring off an investor who was waiting in the wings.

WEEI.com has posted Schilling’s interview on its website in parts:

• Part 1
• Part 2
• Part 3
• Part 4
• Part 5
• Part 6

Curt Schilling won’t be appearing again on ESPN anytime soon.

ESPN and the former Red Sox ace have “mutually agreed” that he will take a leave of absence from the sports network “as he works thru his business issues,” ESPN spokesman Mike Soltys wrote on Twitter Saturday. “We expect he’ll return later this season.”

38 Studios filed for Chapter 7 bankruptcy protection earlier this month, just two years after Rhode Island lured the company to Providence with a $75 million taxpayer-backed loan guarantee. Citizens Bank is suing Schilling for $2.3 million, alleging he guaranteed the company’s debts.

Schilling has been an analyst on ESPN’s “Baseball Tonight” program since the 2010 season, and on June 3 he returned to the show for the first time since 38 Studios collapsed. The news of his leave of absence was first spotted by AOL’s Sporting News.

• Related: Curt Schilling back on ESPN as ‘Baseball Tonight’ TV analyst (June 7)

Andrew Adamson contributed to this report.

(photo: ESPN)

Dan Primack, the plugged-in M&A reporter who writes Fortune magazine’s Term Sheet newsletter, offers four takeaways from the spectacular flameout of 38 Studios and Rhode Island’s $75 million loan guarantee in the new edition:

• Stop letting politicians play venture capitalist.
• If they insist on playing VC, they should share the risk.
• Dogma mixed with dollars can be toxic.
• Successful pivots are rare.

Primack also draws an interesting distinction between 38 Studios and Solyndra, the bankrupt Obama-backed solar firm it’s been compared with by Republicans John Robitaille and Barry Hinckley. “Say what you will about Solyndra,” Primack writes, “but at least the company was required to raise private matching funds before getting federal dollars” – which 38 Studios never did.

At least one person who saw it all up close agrees with Primack. “Smart analysis,” former 38 Studios CEO Jen MacLean wrote on Twitter alongside a link to the piece. Read the whole article here.

• Related: Fortune’s Primack: No VCs said they’ve heard from Schilling (May 29)

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Citizens Bank is suing former Red Sox ace Curt Schilling personally for more than $2.3 million, alleging he promised to repay money his now-bankrupt video game company 38 Studios borrowed from the bank.

The court documents obtained by WPRI.com in the Citizens suit shed new light on how 38 Studios capitalized on its $75 million taxpayer-guaranteed loan from the R.I. Economic Development Corporation and what happened behind the scenes as the company fell apart last month.

Read the rest of this story »

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – The Chafee administration wants to know whether Rhode Island taxpayers have legal avenues to claw back some of the tens of millions of dollars they’re poised to lose after the collapse of 38 Studios.

The governor’s office is close to choosing a law firm to examine whether Rhode Island can seek damages from the professional liability insurance policies of those who worked on the $75 million loan guarantee, a person familiar with the discussions told WPRI.com on Monday evening.

Professional liability insurance, also known as errors and omissions insurance, is purchased by professionals such as lawyers and consultants to protect themselves if they’re accused of negligence. It’s different from the municipal bond insurance the EDC and 38 Studios purchased from Assured Guaranty to protect investors.

Administration officials began discussing possible legal avenues to “recover as much as possible” back on May 1, when 38 Studios defaulted on a $1.1 million payment it owed the R.I. Economic Development Corporation, the person said, adding that the governor also wants to hold people accountable.

(more…)

38 Studios is bankrupt, but Curt Schilling still has a job.

The former Red Sox ace returned to ESPN as an analyst on its “Baseball Tonight” program last Sunday, a spokesman told Sports Business Journal. He’s been with the network since 2010, the same year Rhode Island lured his game company here in exchange for a $75 million loan guarantee.

Schilling made another appearance on the program Thursday evening – the same day 38 Studios filed for bankruptcy in Delaware – alongside fellow ESPN personalities Karl Ravech and Tim Kurkjian.

It’s unknown how much ESPN pays Schilling for his appearances on the network. 38 Studios didn’t pay Schilling a salary over the past year, but the company did spend $39,424 on his travel expenses and $16,454 on his medical and dental benefits, court documents show.

Schilling also appeared twice on Colin Cowherd’s ESPN Radio podcast during the first two weeks of May, after 38 Studios defaulted on a $1.1 million payment to the R.I. Economic Development Corporation.

• Related: Schilling holds onto job as ESPN analyst amid 38 Studios woes (May 24)

The average Rhode Islander would probably say 38 Studios has been lobbying Rhode Island political leaders, in light of multiple confirmed meetings and the company’s success in getting a $75 million taxpayer-guaranteed loan.

Secretary of State A. Ralph Mollis, however, takes a different view. His office says the company is under no legal obligation to register as an organization with business before the government.

“State law defines lobbying as influencing action on legislation by the General Assembly or the governor or on policy-making by the executive branch,” Mollis spokesman Chris Barnett told WPRI.com. “We have received no evidence or allegations of any such activities by 38 Studios that would trigger the requirement to register.”

38 Studios apparently agrees. The company has never registered anyone to lobby at the Rhode Island State House, even though Carcieri and Chafee administration officials, as well as House Speaker Gordon Fox, have all acknowledged meeting with Curt Schilling and other company representatives to discuss its plans.

(more…)

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Governor Chafee sparred with Curt Schilling over his handling of the 38 Studios crisis on Tuesday as another one of the R.I. Economic Development Corporation’s board members resigned.

Read the rest of this story »

My WPRI 12 colleague Sean Daly caught up with Governor Chafee this morning and got his reaction to Curt Schilling’s Projo interview, where the former Sox ace blames Chafee for torpedoing 38 Studios:

At least we now know Chafee would vote to put Schilling in the Hall of Fame.

Dan Primack, the plugged-in M&A reporter who writes Fortune magazine’s Term Sheet newsletter, adds some fascinating context in today’s edition about 38 Studios’ lack of success with private investors, particularly in light of Curt Schilling’s Providence Journal interview (emphasis mine):

Two notes: (1) Who scared off private investors in 2007 and 2008, when Schilling was seeking $30 million (and then more) to get the company launched? Remember, this is a gaming startup that never raised a dime in traditional venture capital. From a story I wrote at the time: “VCs I’ve spoken with say that an investment would require quite a bit of “babysitting.”

(2) Who exactly did Schilling even reach out to, to learn that they were scared off? I’ve spoken with half a dozen local venture capitalists – all but one of whom heard Schilling’s initial pitch years ago. None of them even got a call this time around. Maybe I’m naïve, but don’t you ring up every single person in your Rolodex before laying off 300 employees? Who cares what the governor said? Professional investors can do their own fiscal due diligence. Unless you know it’s a lost cause, and are simply looking for a scapegoat…

Primack expressed his views even more bluntly on Twitter: “Curt Schilling is full of it. Lincoln Chafee scared off private investors? Who scared them off in 2007 Curt?”

• Related: Schilling, UBS i-bankers shill for new 38 Studios investors (July 13)

38 Studios' Salvatore, Todd McFarlane and Schilling

Curt Schilling isn’t talking about 38 Studios, but one of his collaborators is.

R.A. Salvatore, the veteran fantasy writer who helped create the world of Amalur and the storylines for 38 Studios’ games, has taken to the liberal website Daily Kos to defend the company and express regret that the public hasn’t seen “Project Copernicus,” the game 38 Studios was developing with a $75 million taxpayer-guarnateed loan.

“This game is much further along than is being reported – I wish I could show you some of it – and the environments, the animations and the game-play would blow you away,” Salvatore wrote.

“The things they were doing with music and ambient sound took the entire concept of sound in a video game to another level,” he said. “I could go on all night, but I’d probably get sued.” His comments were first reported by Eurogamer.

Salvatore is due to receive $1.46 million from 38 Studios in October under the terms of a consulting agreement he signed with the company in 2007, according to a bond disclosure notice obtained by WPRI.com. He is also eligible to earn up to $5 million in royalties from net receipts of “Reckoning” and other 38 Studios products.

(more…)

Two more largely unknown subsidiaries that 38 Studios established are not incorporated in Rhode Island, casting further doubt on whether the company is eligible for millions of dollars in tax credits it needs from the state.

In November 2009, Curt Schilling’s embattled video game company apparently incorporated two limited liability companies under Delaware law, records show: Mercury Project LLC and Precision Jobs LLC. Neither company was registered in Rhode Island.

WPRI 12 reported Wednesday evening that 38 Studios’ failure to incorporate in Rhode Island could make it ineligible for more than $8 million in state tax credits it’s seeking to avoid insolvency. The governor’s office says officials are looking into the question of 38 Studios’ corporate residency.

(more…)

Curt Schilling has apparently confirmed the authenticity of leaked artwork from “Project Copernicus,” the game his company 38 Studios is developing with a $75 million loan guarantee from Rhode Island taxpayers.

“You guys deserve this” is the headline on a post put up Wednesday night on the fan site 38Watch.com by a user called AlynShir. “38 isn’t dead yet. …  Amalur is worth fighting for. Spread the fire.”

Schilling linked to AlynShir’s post on his Facebook and Twitter accounts just after noon on Thursday.

(more…)

Curt Schilling will have at least a part-time job even if 38 Studios goes under.

ESPN hired Schilling as an analyst for its “Baseball Tonight” program in April 2010, at the same time that the former Red Sox ace was starting intensive talks with Rhode Island officials about moving his game company here in exchange for a $75 million loan guarantee.

Schilling has kept the ESPN job for the last two years while serving as 38 Studios’ chairman and recently began his third baseball season with the network. He is still an active “Baseball Tonight” analyst as of this week, ESPN spokesman Ben Cafardo told WPRI.com.

There’s been “no change in his status,” according to Cafardo. Schilling has also contributed to ESPN Radio and ESPNBoston.com since joining the network.

“While the look is different, the manner is the same,” Chad Finn, The Boston Globe’s sports media critic, wrote in March. “Schilling has opinions as always, he’s being compensated well for them, and he’s sure as heck going to share them.”

Schilling joined reporters on an ESPN call as recently as March 28 to preview the upcoming baseball season. Asked about 49-year-old Rockies pitcher Jamie Moyer’s longevity, Schilling said: “I could not be more impressed. You know, right now my life at 45, the challenge for me is getting out of bed in the morning.”

(photo: ESPN)

Schilling with R.A. Salvatore and Todd McFarlane

Most of the discussion around 38 Studios up to now has focused on the company’s cash crunch. But the biggest threat to its survival may be a related but different problem: the brain drain.

38 Studios’ roughly 300 Rhode Island employees are surely well aware of their company’s problems by now; even those who’ve somehow missed the headlines couldn’t have missed the fact that they failed to get paid last week. Other developers are starting to circle Providence like vultures, with an eye on snatching away the firm’s top talent.

The fact that other companies are already wooing 38 Studios’ workers is further evidence that they are highly skilled individuals who’ll be in demand across the region, particularly in nearby Boston. And for obvious reasons, it is 38 Studios’ best workers who will be in the most demand.

If too many of those top people bail, 38 Studios could be crippled in its efforts to right the ship and move forward on “Project Copernicus,” even if Curt Schilling somehow finds a deep-pocketed investor to get him through the current storm. That’s not a recipe for success – and without a successful game, there’s no way 38 Studios can pay off the $75 million loan backed by Rhode Islanders.

(more…)