Did Curt Schilling's game company know they would run out of money?

Emails from top 38 Studios executives show they were hesitant to disclose the company's financial situation.

Emails obtained by WPRI today suggest that former executives at Curt Schilling's failed video game company 38 Studios knew that the $75 million loan they obtained from the state of Rhode Island in 2010 would not be enough to complete development on MMO Project Copernicus.

Former 38 Studios vice chairman Thomas Zaccagnino said in an email dated July 1, 2010: "I really do not think we should highlight the fact that we might be under capitalized…wont go over well with the staff or board."

This email was sent to 38 Studios CEO Jen MacLean, 38 Studios Chief Financial Officer Rick Wester, and Michael Corso, a tax-credit broker. (All but Corso have since been sued by the state of Rhode Island, along with other architects of the loan.) It was at this time that 38 Studios officials were reviewing the proposed terms of the $75 million loan from the Rhode Island Economic Developer Corporation (EDC), which it would officially receive later that month.

Zaccagnino's email was sent in response to a message from MacLean, who she said she was concerned that the EDC was not planning to give 38 Studios the entire $75 million. MacLean told Zaccagnino, Wester, and Corso that the developer was "not expecting to lose as much as $10MM net." WPRI notes that she also explained that she was uncomfortable telling Rhode Island officials that proceeds from the loan would be enough for 38 Studios to finish Project Copernicus.

In Rhode Island's lawsuit against 38 Studios, the state argues that the developer knew or should have known that the $75 million loan would not have been enough to finish the game. The crux of the lawsuit is whether or not then-governor Don Carcieri and the EDC were intentionally misled about the state of 38 Studios' finances when they agreed to give the studio the loan, which brought the company from Massachusetts to Rhode Island.

Sworn affidavits dated October 2012 have Carcieri saying he believed that the $75 million loan, "together with other cash available or to become available to 38 Studios...would be sufficient to fund" Project Copernicus to completion. Three EDC board members also said in affidavits that they believed 38 Studios would have enough capital to finish the game.

But not all agree. A lawyer for former EDC executive director Keith Stokes, who was involved in the 38 Studios deal and is now a defendant in the lawsuit, said in court documents last year that, “The [EDC] Board was acutely aware that the capital needs of 38 Studios where [sic] in excess of $125MM as acknowledged in the 2010 EDC Inducement Resolution[.] The Board also knew that the net proceeds of the EDC Loan would be less than $75MM."

The 38 Studios vs. Rhode Island case is expected to head to trial, but there's no word on when it will begin. Schilling recently revealed that he has cancer. Last month, he completed his last round of chemotherapy, according to his daughter.

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Eddie Makuch

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.
Copernicus (working title)

Copernicus (working title)

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45 comments
Thanatos2k
Thanatos2k

If Rhode Island thought it took only $75 million to develop a AAA MMO they don't know anything about video game development.


Oh wait, that's exactly it.

cjtopspin
cjtopspin

The State of Rhode Island need not worry about the money.  They simply took it from their state workers pension funds and got rid of their pensions.  Simple. 

jjleshko90
jjleshko90

Makouch, you need to stop with these Schilling stories. We all know they're filler.

morderwrath
morderwrath

Shame Amalur failed in the market it was a obvious unfinished product the size of the game was massive, just had too much left out.it had potential but flopped.


See this is what piss's me off-they will try to inject a new FRPG ip into the market with a sizable budget.They wont take a currant ip like DbD or WoW and make something the size of skyrim or Amalur which stinks for the single player market fanbase we need a new Temple of Apshi btw.Hell Skyrim stunk imo-taking out the RPG pen and paper system which the ES came from out of the game made coins and items worthless meant the content was boring and pointless.Such a Push over game period.


Im so sick of people bashing 38 studios-if you were given the loan would you have done betterl?? Too many people to blame and the state knew what they were geting into.Unexperienced people geting into deep waters not ventured is the lesson overall and they should have spent at least half on game dev to finish it.Not waste it on a MMO.

nyran125tk
nyran125tk

shame on the bosses of this company using a dudes money and fooling him into thinking he can make billions or something on a new franchise. Someone duped Schilling BIG TIME into how much this game was going to make.


Not al game son console sell a million sales. The games that do are not the majority. Not every game is going to sell 5+ million copies on console far from it. Most barely scratch a million sales. Only the big franchises sell millions.


In your first project you would probably be better off aiming for a million sales or something, maybe even less if its a new franchise. I found it crazy their expectations were 5 million sales on a new franchise.


I also cant believe the tax payer had to pay for a FOR profit video game.

dpclark
dpclark

I played Kingdoms of Amalur on PS3 several times through.  It had some nice lighting effects and the combat was good.

rarson
rarson

Maybe they would have had enough money to finish the game if they hadn't decided to relocate all of their employees.

hikaruai
hikaruai

Theyre tryna take the money and run lol

yellowsanchez
yellowsanchez

there was terrible funds management in that company. such a shame it fell

xscrapzx
xscrapzx

Meh, both sides are to blame really.  You had a company that needed the funds and a state that would do anything to bring in economic development.  The bottom line is both sides had a hand in it and now to save face to the public they now want to point the finger.  The bottom line is they both wanted it to work and unfortunately it failed.  They took a risk and it back fired.  Thats what happens.  They are both negligent in this case as far as I'm concerned.

spacecadet25
spacecadet25

Why didn't they downgrade what they were doing with the game so that they can work within the budget, rather than figuratively running into a brick wall at 90 miles an hour when they could see the wall from miles away?

What a loss for the taxpayers, their money was not respected.

Barighm
Barighm

Yeah, that's right. Sue a bunch of people whom no longer technically exist as an entity for money they don't have or will have come close to repaying that loan, all while wasting taxpayer money on legal fees.


OR


Forget the legal battle. Finish the game. Release whatever you've got. Make back SOMETHING.

McGregor
McGregor

I'm actually irritated that this company wasn't more responsible. KoA was a great game and they had the potential to make even more great games. That being said, this is old news, no need to report on it.

IndridCipher
IndridCipher

how could you not know you are out of money?  I don't see how it would be news that a company who ran out of money knew it was coming lol

greaterdivinity
greaterdivinity

Ugh, can we just put this to rest finally?

There's literally nothing left of this horse. It's been beaten so much even its atomic structure has broken down.

SingletreeAve
SingletreeAve

I always assumed they were unrealistically counting on KoA to be a blockbuster hit and generate enough revenue to sustain the studio through Copernicus development.  Too bad it didn't work out.  KoA is one of the few games I find myself going back to every few months.

---Cipher---
---Cipher---

This is still news?


And, how did they NOT know they'd run out of money? When your company is bleeding money, I imagine it's hard not to notice that...

b74kd3th
b74kd3th

I still haven't played a rpg with the level of control koa had

TalSet_11
TalSet_11

@bernard978  Curt Schilling (former MLB hall-of-fame pitcher) started 38 Studios and they released a surprisingly good but poor-selling RPG called Kingdoms of Amalur: Reckoning.  They had planned on making an in-universe MMO codenamed "Copernicus," but sales of KOA:R were pretty much in the gutter, and the company took out a loan to remain afloat, supposedly knowing that the loan would never be repaid due to the project being underfunded, which some may consider obtaining a loan under fraudulent circumstances, and now all the former management of the company are being sued by Rhode Island.  It's a shame because I actually like Kingdoms of Amalur quite a bit.  It was a damn competent RPG with a great combat system and a huge world map, but it was released very close to Skyrim's release date, and going up against Elder Scrolls is a death wish.

decoy1978
decoy1978

@bibleverse1  Welcome to America! And its us taxpayers who will later foot for the bill later on...

blackothh
blackothh

@rarson I thought that the condition of the loan from Rhode Island was that they had to move from Mass to Rhode Island.

nyran125tk
nyran125tk

@xscrapzx  that doesnt take away the fact someone was talking garbage that this would sell 5 million sales to entice Schilling to spend so much money.

hystavito
hystavito

@xscrapzx  That's probably how it went down, politicians wanting to say hey look I'm bringing business/jobs in, even if they truly didn't know for sure, maybe they didn't try hard to find out either.  But then again, who knows, maybe the other side did lie, guess we'll find out eventually.

Thanatos2k
Thanatos2k

@Barighm No one is going to buy the half finished shell of an MMO, are you kidding?

Suaron_x
Suaron_x

@Barighm  A government must pursue and punish criminals who defrauded it.  If the defendants lose the case their wages will garnished.  In the short run, it may cost Rhode Island more to pursue these criminals than it would to let them go.  If you don't prosecute these criminals you just encourage more fraud. 


The game is not playable in its current incarnation.  I'm not even sure if an alpha version is available for testing.  It would've costed 38 Studios around $50M more to reach completion...it'll take another studio even more.  Nobody's going to invest the funds necessary to finish that MMO.

Stiler
Stiler

@McGregor Big Huge Games (the developer of KoA) were actaully making the game on their own when 38 studios bought them up and brought them in to make their game into KoA. 

The mmorpg was in development well before they bought Big Huge Games or KoA, that was the main reasont hey went under. 

They should have NEVER made an mmoas their "first" game, mmo's are notorious for being the most expensive games to make on top of being one of the hardest to get a profit from, as you have to not only put more into development then other games (you need 100's of hours of content) but also because you have to have a lot more post-launch support and developers to keep working on a game whereas normally you'd move them to a new project/get rid of the ones you no longer need. 

If they had simply bought Big Huge Games  and did KoA they'd have turned a profit and still be around.

Suaron_x
Suaron_x

@McGregor I wouldn't call KoA a great game, I'm playing it now and its okay.  It's a large game, that's for sure. The story is very boring and personally I can't wait to finish it, as it started seeming too repetitive about 30 hours in.  The camera is also highly annoying at times.  Based on this game, there's no way I would invest in a sequel or MMO.

TalSet_11
TalSet_11

@IndridCipher  Actually, company can lead on loss for years while technically being "in the red."  It's not easily apparent when you're actually "out" of money, and only a trained accountant would actually be able to make that determination.

nparks
nparks

@IndridCipher They knew the loans wouldn't be enough to get them to release, but they didn't have any other choice.  So they used Schilling's celebrity status to cozy up to the governor and get the public loan guarantees they couldn't get from the private sector.  They bet on the premise that if they could just keep going a bit longer that the Amalur game they bought would be a hit and generate enough revenue for them to finish their game.  It wasn't, and then the whole thing fell apart when they ran out of money and still couldn't find private investment funds to keep them going.

chibi-acer
chibi-acer

@IndridCipher  That's not the situation at hand at all.  The e-mail being cited is from *before* they were granted a $75 million loan.  The question is whether the investors were mislead into believing that the money would be enough to see the development to completion.

Snowx1
Snowx1

@SingletreeAve KoA was a great game. I never figured out why it never caught on to a bigger audience. I mean the quest were meh/meh but decent game overall.

cjtopspin
cjtopspin

@decoy1978 @bibleverse1Actually the Rhode Island state worker (teachers, librarians, police officers, firemen, etc.) ended up footing the bill for this one in the form of their pensions disappearing.  Basically the State of Rhode Island used their pensions as an excuse to rid their state of unwanted debt.

rarson
rarson

@blackothh

Yeah, you're right, but they were doing some ludicrous stuff like guaranteeing home sales to relocate all these people, and they ended up relocating a lot more than they had to (as far as terms of the loan are concerned).

Really, it's almost absurd what a bad idea it seems in hindsight. It's practically a catch-22: move your studio or don't get the money. Kinda sad really, because I think 38 Studios was trying to do the right thing, but they just didn't make sound decisions. Seems like they grew too fast.

Messy all around. I feel bad for the people who relocated only to have no job and a second mortgage on their hands.

Barighm
Barighm

@chibi-acer @IndridCipherYeah, but by the sound of things, Rhode Island was all like "Take the money! Take it! Take it!" and 238 studios was like "Uh, okay, may not be enough, but sure".

TheLeftHandDoom
TheLeftHandDoom

@Snowx1 @SingletreeAve it was a combat dependent game that was too easy.  That's the problem.  you can make grinding games like Skyrim where combat doesn't really matter, or combat games like Dark Souls where story doesn't matter. But if you make a combat game, the combat has to be good. 

morderwrath
morderwrath

@TheLeftHandDoom @b74kd3th  Edge of tomorrow?? live die and repeat, not much for total fustration games like Dark Souls when they make a real RPG sandbox open world experience with it then i will get on board til then-laters...


blackothh
blackothh

@rarson @blackothh  I agree, it turned out to be a terribly unfortunately situation for everyone. Most of the people uprooted their lives to unknowingly get left high and dry.

morderwrath
morderwrath

@TheLeftHandDoom @b74kd3th  I wanna see a good size dungeon crawler hack and slash out of dark souls like Diablo or champions of norrath abit more loot driven and faster paced.