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Thursday, May 17, 2012

38 Studios - who knew and when did they know it?

Hard to Tell Who Knew of 38 Studios Deal

Rhode Island is hyperfocused on Curt Schilling. But unlike eight years ago when he heroically hurled us to a World Series victory, this time we have to rely on his business – not athletic – acumen. His video game company, 38 Studios, was given a taxpayer guaranteed $75 million loan to move from Massachusetts to the Ocean State. But already he’s missed a $1.125 payment to the state.

It seems as if both liberals and conservatives opposed the deal as it was being rushed through at the tail end of the Carcieri Administration. Colleen Conley, of local Tea Party fame, told me she opposed it and told the governor as much. And certainly Rhode Island progressives didn’t like the idea of providing such a giant corporate welfare check to just one company.

So who supported it, other than the former governor? It’s hard to tell.

Funding for the program that granted Schilling his loan was rushed through the State House in a supplemental budget proposal submitted by the governor in April of 2010. Legislators say they asked if the money was wired for a specific recipient and were told it wasn’t, though some doubt that now. In the House, all but six voted for the expenditure. They were Reps. Driver, Ehrhardt, Jacquard, Lima, Newberry and Watson.

One person who sure did is Chafee and Carcieri’s economic development director Keith Stokes. In a letter to the local business community dated August 2010, Stokes wrote:

“Many community leaders, like you, have inquired about why the RIEDC would offer so much credit enhancement to one company. Simply put, our extensive due diligence revealed that while 38 Studios could raise venture equity and stay in their current location, its investors and management team are willing to relocate the company and the related opportunities for Rhode Island if we provide an alternative to their equity dilution.

The RIEDC board is comprised of Rhode Island’s top CEOs, university, hospital and industry executives, heads of small businesses and labor. Members used their considerable business expertise to thoroughly assess the opportunities and risks associated with this transaction. They asked all the hard questions the media and the public have asked, and more.”