I was curious how much Rhode Island taxpayers wound up spending on our unsuccessful effort to win the 2013 America’s Cup, so I asked the EDC to total up the cost. Here’s what I found out:

The R.I. Economic Development Corporation spent $68,141 on the state’s failed bid to host the 2013 America’s Cup race in Newport, Eyewitness News has learned.

Nearly all of that money – $67,500 – is paying for engineering and design work to prepare Fort Adams State Park for the international sailing competition, EDC spokeswoman Melissa Chambers said.

The contract for that went to The Louis Berger Group, an engineering firm based in Morristown, N.J. The company is still moving ahead with its work because the Cup’s organizers are considering allowing Newport to host some preliminary races.

Read the whole story on WPRI.com. My colleague Kat Sotnik will have more during the 6 p.m. news.

Well, the America’s Cup is going to San Francisco, not Newport, just as everybody had expected until a few weeks ago. Now a lot of people are asking, what was all that about anyway?

One of them is San Francisco Chronicle columnist C.W. Nevius, who took Oracle’s Larry Ellison to task for stringing Newport along and leaving a lot of people miffed in the City by the Bay:

Ellison’s team should have spared us the last-minute drama and the tough talk from lead negotiator Stephen Barclay, who said the city was “hanging on by their fingernails.”

Looking at it now, all it did was create ill will and make city officials wonder if race officials will be this difficult for every minor decision from now until 2013.

It seems pretty clear there was no point in sailing off to Newport, R.I., because honestly, the team didn’t give them much time to put together a thorough bid.

“You’ve got to remember,” said one local race supporter, “we’ve been working on this for six or seven months. Newport has been working on it for six or seven hours.”

Going to Newport may have seemed like a good tactical move to get San Francisco to sweeten its deal, but really, it just made Ellison’s team look greedy.

Has anyone totaled up how much Rhode Island spent on our frantic last-ditch attempt to win the Cup? It may be nothing at all; I’m just curious.

(h/t: Bill Hamilton)

38 Studios appears to be adding employees at a rapid clip as it prepares to move its New England studio from Maynard, Mass., to Providence early next year in return for Rhode Island taxpayers’ $75 million loan guarantee.

38 Studios had 175 full-time workers as of last summer, according to a draft bond document obtained by WPRI.com. That rose to 199 workers as of Nov. 1, according to the final version of the same document, which was provided by the R.I. Economic Development Corporation after the deal closed.

Then last night, Curt Schilling spoke briefly at a PBN event in Providence and claimed the company has 230 workers, according to the Projo’s write-up. If Schilling was right, that would mean 38 Studios’ payroll has grown by almost 25% in just the last six months or so – and it has about 30 job openings listed on its website, although there’s no way to know whether those are newly created positions or replacements for departed workers.

That wouldn’t necessarily be a surprise. Once the EDC voted in favor of the loan, 38 Studios’ executives suddenly knew they would be on track to get a whopping $64 million by the end of next year, as I explained in a September WPRI.com story. With that kind of money coming in – $13 million was handed over this month – 38 Studios has a lot more working capital available to spend.

The next big step in the 38 Studios saga is for the company to announce the date when it will start moving into its new headquarters at One Empire Street in Providence. The move-in date is supposed to be announced by Jan. 31.

You couldn’t blame the R.I. Economic Development Corporation’s heavy-hitting board of directors if they harbored some ill will toward Gov.-Elect Lincoln Chafee, considering the criticism he leveled at the agency on the campaign trail – particularly for its approval of the 38 Studios deal, which closed today.

But it’s all water under the bridge now, and there are no hard feelings about the incoming governor among the directors, who includes the heads of Verizon, Rhode Island Hospital parent Lifespan, and insurer FM Global, EDC Executive Director Keith Stokes told reporters at a press conference this morning. The comments were made in the heat of a hard-fought campaign, and the executives understand that, he said.

In a follow-up conversation, Stokes reinforced the point, saying he has spoken with every member of the board about the election and none of them was upset about Chafee’s comments. There won’t be any mass resignations when Chafee takes office next January, he said.

Stokes also downplayed Chafee’s eyebrow-raising threat to sue Gov. Donald Carcieri and the board over 38 Studios, saying it was his understanding that Chafee was only talking about a situation comparable to the shenanigans that allegedly went on at the Rhode Island Resource Recovery Corporation, another quasi-public agency.

Chafee will get the chance to start putting his own stamp on the EDC board shortly after taking office. The terms of three expire in February: FM Global CEO Shivan Subramaniam, Gilbane Chairman Paul Choquette Jr., and Verizon region president Donna Cupelo. Under a law enacted earlier this year, one of those three seats must go to a small businessperson.

“The governor is the chairman of the board of the Economic Development Corporation, so Gov.[-Elect] Chafee has every ability as chairman of this board to set the tone and the direction” of the agency, Stokes said. “At the end of the day, the governor has the right and the need to pick his team,” he later added.

As for Stokes, whose one-year term also expires in February, he hinted today that he would be willing to stay on board as head of the agency if Chafee wants him – which is a possibility, based on the governor-elect’s comments at our Oct. 6 televised debate. Other members of the EDC’s management team are currently being asked to reapply for their jobs as the agency continues to undergo a broad shakeup in the wake of the 2009 Verrecchia report.

Stokes, who has known Chafee for years, said his knowledge of all levels of government will come in handy on Smith Hill. Stokes also said he plans to invite the incoming governor to the EDC board’s next meeting, which is scheduled for Nov. 17, two weeks from today. The agency’s staff is preparing briefing materials to get Chafee up to speed on its activities.

Stokes, who served on the EDC board before Carcieri appointed him to a one-year term as its chief, also offered strong words of praise for the current board, which was put in place after the Verrecchia report. Calling them “the best and brightest” from Rhode Island’s business community, he said they have been engaged and forceful in their oversight of the agency since their confirmations in February.

We’ll hear from Gov.-Elect Chafee about this and many other issues at a press conference he is scheduled to hold at 3 p.m. in Warwick.

Over the last few days, I’ve been hearing a growing number of whispers that the R.I. Economic Development Corporation is almost ready to close on the $75 million loan it’s taking out on behalf of 38 Studios. Although I’ve got nothing official to report at the moment, that would fit with the most recent target date EDC lawyer Robert Stolzman laid out for me in mid-October.

If the deal closes this week and Lincoln Chafee wins the governorship tomorrow – both big ifs, mind you – it would set up an almost immediate clash between the EDC and the new governor-elect, who has been scathing in his criticism of the deal since July.

Among the other two leading candidates, Frank Caprio said at our debate last week that if elected he will march down to EDC headquarters on Wednesday to do something unspecified about 38 Studios. John Robitaille has been a supporter of the agreement.

Meanwhile, Amazon.com is now taking pre-orders for 38 Studios’ first game, “Kingdoms of Amalur: Reckoning,” which is set to be released by Electronic Arts for Playstation 3, Xbox 360 and PCs next September. The price is $59.95, and the low-key cover art is what you see illustrating this post. (Thanks to Dean Lester for pointing this out first.)

“Reckoning” is being developed down in Maryland by 38 Studios subsidiary Big Huge Games; the company’s other, riskier release (“Project Copernicus”) is the one Rhode Island is backing. For a primer on the two games, check out my WPRI.com story from August.

38 Studios' Curt Schilling and Todd McFarlane

Frank Caprio has again suggested that the $75 million taxpayer-backed bond sale for 38 Studios might not be completed, WRNI’s Ian Donnis reports. Here’s Caprio’s quote during a Greater Providence Chamber of Commerce forum this morning, via Ian:

It was July it was going to close, it was August, it was September – it’s [now] October 19th and there’s a lot of opportunities for people to invest money today and the fact that this hasn’t been taken up as quickly as people thought speaks volumes.

As someone who’s keeping close tabs on the deal’s progress, I’m not so sure it does – though the EDC is now hinting the deal may not close until November.

First off, Caprio is wrong when he asserts that the 38 Studios transaction was originally supposed to close in July. The R.I. Economic Development Corporation board didn’t even approve the deal until July 26, and at that time the EDC projected an Aug. 31 closing.

Caprio is right, though, when he notes that first August, then September and now half of October have all passed without the deal being completed, and that the EDC has been way too optimistic in its projections of how quickly it could get done.

Rob Stolzman, an EDC lawyer, admitted as much to me in an e-mail last week. “The original closing date target for the end of August, early September was ambitious given the nature of the transaction, but possible,” he said. “The slippage [from the original closing date target] remains the result of typical adjustments and advances in the transaction.”

Stolzman, like other EDC officials, was emphatic that the $75 million transaction has not run off course. He said the deal should close “within the next few weeks or so” – which would give us a new target of early November – and said no “new or unusual issues” have come up since the agency sat down to brief three Projo reports and me a month ago.

(I’ve reached out to Stolzman to check, once again, whether anything has changed since we exchanged e-mails last week, and I’ll update when I hear back.)

Stolzman pointed to a longer-than-expected wait for 38 Studios to sign the lease for its offices-to-be at One Empire Plaza as one reason for the continued delay in closing the deal. “38 Studios was required to sign their lease before the underwriters began soliciting investors,” he said. “That took a few weeks longer than hoped for, but the result was well worth the slight delay.”

If that’s the case, Barclays and Wells Fargo – the two banks marketing the $75 million worth of bonds to investors – may not even have started scouting for buyers until the last week of September, after the lease was executed for One Empire Plaza.

As an aside, the continued delay in closing the deal could create an awkward moment when it finally is completed – at this rate, the deal may close within days of Rhode Islanders electing a new governor who is firmly opposed to the $75 million guarantee. The agency has dismissed requests from the candidates that it hold off until Gov. Donald Carcieri’s successor takes office; in fact, EDC Executive Director Keith Stokes specifically said he wants it done “before the next administration is in place.”

Can’t get enough of Nesi’s Notes’ 38 Studios coverage? There’s much more where this came from!

(image credit: 38Gamers.com)

Dean Lester, a blogger who runs the 38 Studios fan site 38Gamers.com, has been a staunch defender of the company against critics who’ve doubted its strategy and Curt Schilling’s management abilities. (The fact that he started the site even before 38 Studios actually released any games gives some indication of his sympathetic view of the company.)

That’s why I found it notable when I saw this post Lester put up last night criticizing 38 Studios (and partner Electronic Arts) for the weak tea they’ve served gamers eagerly awaiting “Kingdoms of Amalur: Reckoning,” the role-playing game 38′s Big Huge Games subsidiary is developing for a planned September 2011 release. Here’s what Lester had to say:

[It's] been months since the announcement from 38 Studios about their single player RPG called Kingdoms of Amalur: Reckoning. Many gamers have signed up for the newsletter and been patiently waiting. The first newsletter called “The Well” was finally emailed out today to eager fans looking for new information about the game. To finally get the newsletter and have it only feature a video recap and pictures of Gen Con that happened two months ago had to be a disappointment.

To add to this I then realized that 38 Studios had said the following:

“Reckoning’s newsletter is coming soon and early registrants will receive special pre-release content before the newsletter’s release. Be sure to register for the newsletter so you don’t miss out! Sign-up link is located in the top right after the age verification page.”

Unless I missed something I have not gotten any pre-release content. I have been one of your biggest fans and supporters but guys this is the easy stuff and I am sorry but if you can’t execute on this how are you going to make people believe you can execute on the hard stuff? This is the first time since I heard that Curt Schilling was starting up his own game company that I have doubt creeping into my mind and I don’t like it.

“Reckoning” is the first of two games in development at 38 Studios; the other is a massive multiplayer online game called Project Copernicus that is supposed to be released in September 2012. Copernicus’ development will be funded by the $75 million loan the R.I. Economic Development Corporation is taking out on 38 Studios’ behalf.

Schilling and 38 Studios’ executive art director, Todd McFarlane, who created the comic “Spawn,” will have another chance to get gamers excited about what they have in the pipeline this weekend.

The two are scheduled to appear Saturday at the annual New York Comic Con convention to sign posters. 38 Studios will have a booth at the event where visitors can get “an exclusive sneak peek at prototypes of upcoming ‘Reckoning’ action figures designed by McFarlane Toys,” according to a press release.

As I reported yesterday during what turned out to be 38 Studios Day here at Nesi’s Notes, the last step for the EDC’s $75 million bond deal to close – sending out the official bond document – still hadn’t happened as of midweek. I haven’t heard from the EDC today on whether anything has changed.

Update: “Nothing new today” on 38 Studios, EDC spokesman Mike Blazek reports.

Update #2: And a Moody’s spokesman tells me the rating agency will not do interviews discussing its review of the 38 Studios loan guarantee.

One basic fact I always like to know about a company is how many employees it has. For 38 Studios, the headcount I’ve been reporting is 175 full-time workers – specifically, 94 people at its studio in Maynard, Mass., and another 81 at its Big Huge Games subsidiary’s studio outside of Baltimore. That number came from a draft bond document I obtained.

Two weeks ago, I got a very nice e-mail from a 38 Studios marketing rep telling me the number was wrong. “38 Studios actually has not publicly announced a total employee headcount, and this number is inaccurate, so if we could have that removed it would be great,” he said.

I wrote back explaining that the number came from an official document, but that I would be glad to use an updated figure if they could provide it. I never got a response. (The company has been declining to answer almost all press inquiries while it waits for the $75 million loan transaction to close.)

Lo and behold, while reading the Moody’s rating document on the 38 Studios deal – which is dated four days after the e-mail I received disputing the headcount of 175 – I came across this paragraph:

[38 Studios] is currently operating two video game production studios: one in Baltimore, Maryland with 81 staff members working on a single-player multi-platform game, and a second studio in Maynard, Massachusetts, with 94 staff members which will move to Providence, Rhode Island in order to leverage and retain talent from nearby higher education institutions such as Rhode Island School of Design, the University of Rhode Island, Brown University and the New England Institute of Technology.

Without going to the two studios and counting each employee myself, I can’t vouch for whether that 175 number is correct or not. But if it’s wrong, someone’s been giving bad information to Moody’s and the EDC, too.

Update: I should add that 38 Studios has nearly 40 job openings listed on its website, though I don’t know what the mix is between newly created positions and replacements for people who have left the company.

It’s been a busy two weeks here at WPRI – with investigations, exclusive polls and last night’s debate – but I’ve been doing my best to stay on top of what’s happening with the 38 Studios deal.

It’s also been two weeks since the video game company picked its new location in Providence and the EDC got two favorable bond ratings for the $75 million loan guarantee. That cleared the way for underwriters Barclays and Wells Fargo to close the transaction by selling the bonds to private investors.

The formal signal that the process is coming to a close will be when the EDC sends the investors what’s known as the “private placement memorandum,” or PPM – the official document with all the legal fine print about the loan. That had been expected to be done by late last week, but EDC spokesman Michael Blazek told me today the document hasn’t been finalized and mailed yet.

Although I don’t know what the holdup is, I don’t have any reason to think things have gone awry – though originally the deal was supposed to close back in August.

(more…)

The EDC just sent out the full ratings reports on the state’s $75 million loan for 38 Studios from Moody’s and Standard & Poor’s, both of which gave the bonds a favorable rating last week. Unfortunately, I don’t have time to dig in to the two reports right now – so let’s do some crowdsourcing!

Here are PDFs of the Moody’s report and the S&P report. Take a look – what strikes you as interesting?

Update: And if you’re wondering where things stand overall with the 38 Studios deal, check out this post from Friday.

In defending the 38 Studios deal, one of the main reasons state officials have offered for supporting it is Curt Schilling & co.’s promise to bring 450 jobs to Rhode Island in exchange for the $75 million loan guarantee. But as I explain in a new story just posted over on the main site, the relationship between the loan money and the jobs pledge is more complicated than you may think:

Curt Schilling’s video-game company has to employ only 250 full-time workers in Rhode Island, not the 450 cited by state officials, to get most of the $75 million the government plans to borrow on its behalf, an analysis by Eyewitness News has found.

That’s because Schilling’s 38 Studios actually has two different agreements with the R.I. Economic Development Corporation – a payout agreement and a separate pact called a “full-time jobs covenant” – and their terms and conditions are not identical.

The payout agreement requires 38 Studios to employ 250 workers in the state by December 2011. At that point, the game company is eligible to receive $64 million of the loan money, which is 90 percent of the proceeds after fees, according to an EDC fact sheet, agency officials and a draft bond document obtained by Eyewitness News.

I hope you’ll read the whole thing, both because it took quite a bit of reporting to piece all this together and because I think the story will help people better understand the structure of the deal, which is expected to close by early next month (although it’s been delayed twice so far).

One thing I’ve been struggling with in reporting on the 38 Studios agreement is finding straightforward ways to explain it. Even I find it hard to keep all the details straight, and I’m paid to do so. (No wonder, perhaps – an EDC lawyer told us last week there will be about 10 different legal documents laying out the deal.)

So if you felt a little swamped reading today’s latest story, I have another option for you – a chart! For every three months from October 2010 to October 2013, it shows two things: the percentage of loan money 38 Studios is eligible to receive by then, and the percentage of the 450 jobs it is supposed to have created:

As you can see, the loan money and the employment targets are on two quite different schedules. (Again, the chart shows percentages for both, not dollar amounts or job counts, in order to make the comparison simpler.)

(more…)

This is as much a reminder to myself as anybody else – but the correct way to pronounce the last name of Providence’s Democratic mayoral nominee, Angel Taveras, is tuh-VAIR-iss.

I’ve heard all sorts of pronunciations, but that comes straight from his campaign manager, Lauren Nocera, who’s still recovering from the whirlwind that followed Taveras’ victory on Tuesday night. (I guess the possessive version would be tuh-VAIR-iss-iz.)

As Tim White will tell you, I still say Providence Mayor David Cicilline’s last name wrong – it always seems to come out “SEE-suh-lee-nee” when it’s properly pronounced “SISS-uh-lee-nee” (I think!) And I’m half-Italian. (Although RI.gov’s Joe Alba once pointed out to me that the “ci” is more like “chee” in Italian, so I may just play it off as if I’m terribly cultured.)

Either way, I’m hoping to start off on the right foot pronunciation-wise with the next mayor. (When I worked in print, it didn’t really matter if we said things wrong; TV is a whole new ballgame.) Luckily, even if Taveras loses in November, I’m confident that I can pronounce Scott correctly.

On an unrelated note, don’t miss my new story over on the main site with some new developments in the 38 Studios deal – the loan transaction may not close until early October now, and the money can’t be used to pay off Schilling. EDC briefed a few reporters for more than two hours this morning, so I’ll have much more on this in the coming days.

Reporters (including myself) have been pestering the EDC for more details on the $75 million loan the state plans to take out on behalf of 38 Studios, so today the agency released an updated fact sheet about the agreement – but also said its top leaders, including Executive Director Keith Stokes, would not answer questions about it until the transaction is a done deal. That is expected to happen by the end of the month.

After a few hours of confusion and a good amount of back and forth with the agency, I’ve updated my WPRI.com story from this morning with what I hope is a relatively clear explanation of how the money will be disbursed to 38 Studios:

The R.I. Economic Development Corporation is in the final stages of negotiations ahead of the $75 million bond sale for Schilling’s company, 38 Studios, which has promised to move its headquarters to Rhode Island and create 450 jobs here in return for the loan.

38 Studios will receive about $51 million of the proceeds from the bond sale as it meets various milestones over the 15 months after the transaction closes, according to a fact sheet from the EDC. Nearly $20 million more will be held in reserve to pay off the debt. The remainder will cover bankers’ fees and other costs.

If 38 Studios meets all the state’s requirements over those 15 months, it will then get another $13 million or so out of the $20 million reserve fund, EDC spokeswoman Melissa Chambers said. The state will set aside the remaining $7 million to help pay back investors in case something goes wrong and 38 Studios can’t cover what it owes them.

But if the company were to run into trouble owing more than $7 million, state lawmakers would have to decide whether to step in and use taxpayer money to pay back the investors who provided the loan.

There are at least two reasons why there is so much uncertainty surrounding the 38 Studios deal. Part of it is because this is a fluid situation, and negotiations over the exact details of the terms and conditions governing the loan are still being sorted out. But part of it is also the EDC’s failure to be fully transparent – the agency will not allow the public to see the draft bond agreement, which means it cannot be vetted independently, nor will it make its leaders available to discuss the deal.

Reporters are left to pick over the agency’s relatively terse fact sheets about the loan, which answer some questions but also raise new ones.

Lincoln Chafee’s campaign is planning an event this afternoon where the gubernatorial candidate will lay out some proposals for changing how the state makes loans to private companies in the wake of the 38 Studios brouhaha. Kathy Gregg at the Projo has details:

On Wednesday, the Republican-turned-Independent Chafee rolled out a “10 point plan to leverage the $125 million Rhode Island Loan Guaranty Fund to maximize job creation while limiting taxpayer risk … through diversification.”

Under his proposal, for example, “a designated percentage of the Rhode Island Loan Guaranty Fund will be reserved exclusively for promising small businesses,” and the guarantees would be capped at $6.25 million.

As he sees it, the state-run loan guarantee program should “target loan guaranty support for 50 or more new or existing businesses,” and with a “possible equity stake and board position” for the state in each target company being supported by the guaranty program.

To limit risk of taxpayer money, his plan also states that: “no single business would be eligible to receive a guaranty in excess of 5% (or $6.25 million) of the Fund, absent compelling business and job creation reasons to exceed that general cap.”

I haven’t seen details on the proposal yet, but two things strike me.

First, there is no such thing as a “Rhode Island Loan Guaranty Fund” – the program they are referring to is the new Job Creation Guaranty Program, which the General Assembly created in June to back as much as $125 million in loans to private firms. (38 Studios is set to get $75 million of that total.) It’s a small detail, but worth pointing out since it raises a question about how much the campaigns and candidates really know about this stuff.

Second thing – Chafee’s allowance that “compelling business and job creation reasons to exceed” the $6.25 million cap could exist seems like a loophole big enough to drive a truck through. After all, wouldn’t the EDC board and Gov. Carcieri argue that’s exactly the reason they’re exceeding that amount for 38 Studios? Doesn’t mean they’re right, but it shows how complicated these judgment calls are – although a $75 million guarantee would be 12 times more than Chafee’s proposed cap.

Lame duck Gov. Donald Carcieri has had a few less-than-nice things to say about his former-fellow-Republican, Lincoln Chafee, who’s now running for governor. Chafee has gotten Carcieri’s dander up by going after the governor’s support for the $75 million loan guarantee to Curt Schilling’s video game company, 38 Studios.

One interesting wrinkle in all this is Carcieri’s relationship with another gubernatorial candidate, Democrat Frank Caprio. The two men worked together at Cookson America in the 1990s, and are said to have a warm rapport. With Carcieri’s former aide, Republican John Robitaille, trailing Chafee and Caprio in the polls, the man who is likely the governor’s second-favorite candidate – Caprio – could reap the benefits of any damage Carcieri does to Chafee.

(It would make it a lot easier to type blog entries about the three of them if at least one of these men had a last name that didn’t start with “C.” At least Chafee’s “A” doesn’t come until the third letter.)

Meanwhile, officials at the EDC told me today it may take until near the end of September for Wells Fargo and Barclays to close on the 38 Studios loan transaction. Much more in my new story over on the main site.

As more than one observer has pointed out, in the end the state’s decision to back a $75 million loan to Curt Schilling’s gaming company, 38 Studios, will be judged based on whether the company is successful. And that will depend on whether its two games – one scheduled for next year, and a bigger one with a TBD release date – are hits. I took a look at their prospects in a new story just posted on the main site:

Curt Schilling faces daunting challenges – but not insurmountable ones – in turning his company’s flagship video game into a hit and making good on his promises to Rhode Island.

The retired Red Sox ace’s 38 Studios is aiming to crack the toughest section of the gaming market with its Copernicus project, a so-called massive multiplayer online game, or MMO. …

Creating an MMO “is a big gamble, and it’s very unlikely he’ll be successful” with Copernicus, Mike Hickey, an analyst at Janco Partners in Colorado, told Eyewitness News. Schilling “must be a great marketer, because it’s a pretty difficult market to raise capital in,” he said.

The rest is here.

GoLocalProv has a story this morning about how Curt Schilling’s 38 Studios could potentially be eligible for millions of dollars from Rhode Island’s film and TV tax credit:

In the state’s effort to lure Curt Schilling’s video game company to Rhode Island with a massive loan guarantee, the state unintentionally may have allowed the former Red Sox pitcher to exhaust the tax credit program designed to help the film and television industry. …

Two experts—Steven Monacelli, a founding partner at the prominent accounting firm Restivo Monacelli and URI business professor Ed Mazze—confirmed yesterday that Schilling not only could apply for the credits but also could receive millions of dollars in tax credits in addition to his $75 million loan guarantee.

It’s a good catch by the new organization. One thing it doesn’t include, though, are Schilling’s own comments about tax credits, which he made yesterday during the WEEI interview that I wrote about last night. I didn’t include it in my story, but here’s what the former pitcher said about tax credits:

Unbeknownst to a lot of people, we’re not looking for tax credits. Tax credits are an endgame play. For a studio that has 100 people and that doesn’t burn – you know, you’re talking about an EA [Electronic Arts], or a Sony, or an Activision or a Nintendo for tax credits. You need 300, 400, 500, 600 people and a monthly burn of $5 [million] to $10 million for tax credits to move the needle.

Tax credits for us are not – they were never, ever something we were after. Because we’re in the middle of development. We don’t need tax credits. We need capital. And that’s why I continue to fund [the company].

But you’re looking at probably annually in the $100 million range, if not more, [in tax revenue to Rhode Island] if we’re successful. And again, you’re looking at moves – I’m going to be moving close to 100 people to the state from another state, which you can imagine literally, you know, 50 to 75 to 100 new homeowners, and then another 200 to 300 over the next two years, as well.

Now, none of those comments rule out the possibility that 38 Studios could eventually seek out tax credits in Rhode Island. But it certainly doesn’t sound like they were a part of what drew Schilling here – and he will have to answer some tough questions if the company goes looking for them anytime soon.

One interesting piece of the whole brouhaha about the Curt Schilling deal is the difference of opinion we’re seeing on it between current officeholders and candidates. The AP’s Michelle Smith found all five candidates for governor questioning the $75 million loan guarantee last weekend, and Red Sox executive Jeremy Kapstein, who is running for lieutenant governor, expressed doubts, too.

By contrast, Gov. Donald L. Carcieri – who chairs the R.I. Economic Development Corporation’s board, and can’t run for re-election because of term limits – backed the deal and helped get eight of the nine board members in attendance Monday to vote for it.

The EDC’s press release heralding the deal included supportive quotes from House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed, as well. (Of course, Fox and Paiva Weed are candidates this fall, too – but their leadership of the House and Senate won’t be on the ballot, just their individual seats.) And Keith Stokes, head of the EDC, told me lawmakers specifically drafted the legislation creating the loan guarantee program to make sure $75 million was available for Schilling.

There are a few ways you could look at this.

One argument – the one made to me yesterday by Stokes – is that candidates running for office have to make these statements because they think it’s good politics. It gets them attention from talk radio, TV stations and the papers, and creates a campaign issue. By contrast, officials like Gov. Carcieri and the EDC board have to make tough decisions because they are actually in charge of running the state right now.

That is certainly plausible. But there are other ways to look at it.

For one thing, these candidates have not spent as much time being briefed by 38 Studios – which means they haven’t seen all of the information that helped sway Carcieri and the board. That means they could be unaware of some crucial positive factors in 38 Studios’ favor – or they could have a clearer perspective on the deal because they weren’t so close to it (and Schilling’s celebrity).

In addition to that, the various candidates who have questioned the deal are all speaking with voters every day and will face them this fall. If they are hearing significant doubts about the 38 Studios deal out on the hustings, that could mean they are expressing what a large number of regular Rhode Islanders think about the deal. (I would love to see a good poll on public opinion about it.) We’ll see.

Update: Well, looks like one current officeholder who is also a candidate is backing the 38 Studios deal: General Treasuer Frank Caprio. The Democratic candidate for governor now tells WRNI he’s “going to be a cheerleader for” the deal. “Let’s do everything in a top-shelf fashion, and let’s put the wind at the back of 38 Studios, and let’s make sure it’s a success,” he said.

The Boston Globe has a roundup of reactions from folks in Massachusetts to Rhode Island’s $75m loan guarantee to Curt Schilling’s company, 38 Studios:

I spoke this afternoon with Keith Stokes, executive director of the R.I. Economic Development Corporation, to get his side of the story on the Schilling deal. I also asked him about why his agency’s board voted to give Schilling 60 percent of the amount it is allowed to guarantee before the EDC had even finalized the rules that will govern the program. Here’s an excerpt from my story that was just posted:

Rhode Island signed away more than half of its brand-new loan program to Curt Schilling’s company before state officials had developed rules and regulations for it because it was too good a deal to pass up, a top official said Tuesday. …

The EDC had originally asked for the Job Creation Guaranty Program to have authorization for up to $50 million in loan guarantees, which would “provide a level of flexibility that our [existing] capital programs had not had,” Stokes said.

But after Schilling reached out to state officials in February, the General Assembly decided to increase the program’s size to $125 million, Stokes said. That way, $75 million would be available for 38 Studios and the original $50 million would remain for new and existing companies in Rhode Island.

Basically, Stokes said the General Assembly added $75m to the $50m program with the idea being it would almost certainly be used to aid 38 Studios – so that money would not have been there to help other companies, as has been argued by some critics.

Having reported on the Rhode Island economy for a bit more than two years now, I am pretty intimately familiar with the R.I. Economic Development Corporation, aka the EDC. But with the agency’s board now giving high-profile backing to Curt Schilling’s video game company, I’m seeing the agency referenced in some unlikely places – such as Boston Globe sports writer Dan Shaughnessy’s column this morning:

Not the sort of coverage the agency wants, of course, though in fairness Shaughnessy’s never been Schilling’s biggest fan to begin with.