Rhode Island Gov. LINCOLN CHAFEE yesterday "rebutted criticism" from former MLBer CURT SCHILLING who said that Chafee's comments "had killed investor interest" in his 38 Studios, according to the PROVIDENCE JOURNAL. Chafee said, "An investor's not going to be scared away by some governor's comments. It just defies logic." He said that a “forensic audit of 38 Studios could begin as early" as today (PROVIDENCEJOURNAL.com, 5/29). In Boston, Caffrey & Wallack write the relationship between Schilling and the state of Rhode Island “appears irrevocably damaged" as the finger-pointing between Schilling and Chafee “escalated” yesterday. Schilling “accused the state, which granted his video game venture up to $75 million in loan guarantees, of breaking promises to help the company remain viable just as it was closing in on a deal with an outside company to salvage its major unfinished video game.” He also "disclosed that he has invested some $50 million of his own money into 38 Studios, and he risks losing it all.” Schilling said, “To be clear, I’ve never taken a penny out of this company. If this company fails, I will be financially devastated, and so will other people.” The recriminations come as the two sides are “also trying to find an outside investor to revive production of 38 Studios’ major enterprise, a sprawling online video game code named Copernicus.” Schilling seemed “most bitter about Chafee’s public remarks about 38 Studios’ financial condition, in which the governor asserted the company’s first product was a bust and questioned its viability.” Chafee said of whether he could still work with Schilling, “I can work with anybody.” He also said there is “no indication” so far that the video game production company “is preparing to sue the state or file for bankruptcy protection” (BOSTON GLOBE, 5/30).
ALL SIGNS POINT TO NO: In Providence, Stanton & Smith noted if 38 Studios fails, state taxpayers "will be liable to repay more than $100 million.” Schilling said that state economic-development officials “reneged on a deal to approve film tax credits to which 38 Studios was legally entitled, and to allow the company to defer a $1.12-million payment that was due the state on May 1 so that 38 Studios could meet its May 15 payroll” (PROVIDENCE JOURNAL, 5/29). In Boston, Caffrey & Farrell wrote Chafee earlier this month "braced himself for a full-on sales pitch" from Schilling. But his performance at the meeting with the state business development council was “one of several signals that eventually convinced Chafee there was little he could do to help save 38 Studios and there was no point in throwing good taxpayer money after bad.” The collapse was "marked by a near blackout on reliable information about the company’s finances, and what Schilling and other executives were doing to save it.” Video game consultants who advised Chafee told him that 38 Studios “had not developed a large and loyal fan base with its first product, Kingdoms of Amalur: Reckoning.” Stanton & Smith: "The normally garrulous Schilling, who has assiduously cultivated a high profile in the media, has been notably silent in public. ... What little Schilling has said has come in inspirational notes to employees and fans issued through social media outlets” (BOSTON GLOBE, 5/26).
