"Schilling move fires debate over incentives" by Hiawatha Bray, Globe Staff | July 28, 2010
Who lost Curt Schilling? As the former
Glad to see him go!
Related: Schilling Hits the Showers
I feel like we have been saved, Massachusetts taxpayers.
The deal has reignited debate over the wisdom of economic incentives like the loans, guarantees, and tax breaks that state and local governments give to companies that promise to create or retain jobs.
Related: Massachusetts' Corporate Cookie Jar
Memory Hole: Massachusetts' State Budget
Those Are the (Tax) Breaks in Massachusetts
Massachusetts' Lost Decade of Jobs
Was all the squandered tax loot worth it, Bay-Stater?
Because Schilling’s four-year-old company has no revenues and has not yet released its first product, critics said, Rhode Island is gambling on the success of an untried company when its failure could leave taxpayers on the hook for millions of dollars.
Greg Bialecki, Massachusetts secretary of housing and economic development, said Schilling apparently hoped his discussions with Rhode Island officials would goad Massachusetts into making him a better offer.
We USED to call that EXTORTION!
Although Bialecki said he had discussed possible tax breaks with Schilling earlier this year, in the end Massachusetts was unwilling to offer such a big incentive package to one company....
Out at first.
Massachusetts should have made a better offer, said Michael J. Cavaretta, a lawyer at Morse, Barnes-Brown & Pendleton in Boston who works with local game companies. Cavaretta said that with government assistance, Greater Boston could someday rival San Francisco, Los Angeles, or Seattle as a center for video game design. “To get to that level, [offering] some incentives would certainly help,’’ he said.
Not that he has any self-serving interest.
On Monday, Schilling said that he stopped talking to other states four months ago, and started dealing exclusively with Rhode Island. “It’s paid off in spades,’’ he said.
Yeah, $75 million dollars worth of taxpayer spades.
Thanks to Rhode Island, Schilling said, 38 Studios will have enough funding to go beyond merely producing games, and into the more profitable business of publishing them. In April, Schilling said that he had invested $30 million of his own money in the company, meaning the Rhode Island deal will bring the total investment in 38 Studios to more than $100 million before it makes its first sale.
Schilling was not available for comment yesterday.
Rhode Island will not provide the money directly from taxpayer funds. Instead, the state’s economic development corporation will issue $75 million in bonds that will be sold by a bank, which in turn will lend the money to the company in stages, as it meets a series of milestones....
And what is their fee for handling?
Rhode Island taxpayers would be stuck with the unpaid balance of the loan only if 38 Studios fails.
I see you getting out your wallet already.
The state gets first rights to all of the company’s collateral, including intellectual property rights to any 38 Studios games, and can use that to recover money if the company can’t repay the loans.
Yeah, fire sales for failing businesses really bring in a lot.
“I would love to see a program like this in Massachusetts,’’ said Jeffrey Anderson, chief executive of rival sports game company Quick Hit Inc. in Foxborough. Anderson said he’s generally opposed to government aid to businesses, but the video game industry is different because it attracts high-paying jobs that can give a big boost to a state’s economy.
And because HE WORKS in THAT INDUSTRY!!
Anderson said that for a good offer, he might follow Schilling across the state line. “Is it something we’d consider, given the right opportunities?’’ said Anderson. “Of course.’’
BYE!!
But Bill Reed, the chief executive of Demiurge Studios Inc., a game development company in Cambridge, thinks Rhode Island went too far. Reed is sorry to see 38 Studios go; he published an open letter to Schilling on the Demiurge blog, urging the former ballplayer to reconsider, and offering jobs to 38 Studios employees who choose to stay in Massachusetts.
It makes no sense to provide such a large loan guarantee to a start-up that has yet to bring a product to market, according to Reed. “It’s hard for me to make sense out of doing it,’’ he said. “I wouldn’t want to see my state doing that.’’
Neither would I!
Gubernatorial candidates in both Rhode Island and Massachusetts attacked the loan guarantee....
Schilling’s search for government incentives was first reported in March. At the time, Schilling, who holds conservative political views, wrote on his company’s blog that “38 Studios is not looking for ‘handouts’ or ‘tax breaks’. Any responsible entrepreneur exhausts every avenue of potential funding when running a start-up company; we’re no different.’’ Schilling said he had a responsibility to his 180 employees to explore every option to make 38 Studios a success.
“We were founded here, in Massachusetts, and it’s where we would love to stay, and grow,’’ Schilling wrote. “But (and there’s always a but) our first responsibility and priority will always be the long-term health of the company. . . . To not explore and pursue these conversations with other cities would be the height of negligence on our part, and that’s just not going to happen.’’
See ya, traitor!
