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38 Studios opts to pay loan, not employees

38 Studios opts to pay loan, not employees

Thu 17 May 2012 9:22pm GMT / 5:22pm EDT / 2:22pm PDT
BusinessFinancial

UPDATE: $1.125 million payment returned due to lack of funds; studio fires temps and contract employees

The state of Rhode Island is facing a terrible setback after disappointing sales from 38 Studios and Kingdoms of Amalur. The company, which got started in Massachusetts and was lured to Rhode Island with a massive $75 million loan from the Rhode Island Economic Development Center, is facing a major debt crisis after missing a $1.125 million payment. It is now being reported that the company will opt to pay that loan, rather than play employees.

Current employees at the studio were unable to comment on the matter, but things looked quite grim outside the studio, reports local news WPRI. The studio counts 379 full time employees, with over 288 of them working in Rhode Island.

While paying off the debt might stave off some problems for 38 Studios, the employees and those surrounding the loan deal are being affected. 38 Studios has fired all temp employees, as well as all those on contract. The executive director for the state's Economic Development Corporation (EDC), Keith Stokes, has also resigned his position. Rhode Island Governor Lincoln Chafee has not named a replacement yet.

38 Studios, founded in 2006 by former Boston Red Sox pitcher Curt Shilling, has received $49.8 million of a $75 million loan from the state. It looks as though taxpayers in Rhode Island will more than likely have to front the bill should the studio go under.

Things might not be lost, as Rhode Island is also helping to pay for the next game from the studio. The supposed MMO titled "Project Copernicus" is currently in development, though nothing about the game has come to light, including release schedule.

UPDATE: It is being reported that the check, hand delivered to the EDC by 38 Studios, has been returned. The company's chief financial officer has confirmed that there is not enough to cover the $1.125 million owed at this time.

6 Comments

Christopher Bowen
Editor in Chief

447 692 1.5
Today's lesson: don't give a massive loan on the taxpayer's dime to someone just because he had a couple of big games as an athlete seven years prior!

Edited 1 times. Last edit by Christopher Bowen on 17th May 2012 10:39pm

Posted:2 years ago

#1

Mike Kennedy
Founder | CEO

20 2 0.1
Ouch! That had to have been one hella sales pitch to the state. I do wish everyone well though that is caught up in that deal. KOA was a good game too!

Posted:2 years ago

#2

David Radd
Senior Editor

359 78 0.2
I think the bigger issue is Project Copernicus, the MMORPG 38 Studios has been working on for a very long time. That's the project that's been sucking up a lot of money for a very long time and I'm not sure it's close to releasing. I really hope it doesn't sink the whole company.

Posted:2 years ago

#3

Christopher McCraken
CEO/Production Director

111 257 2.3
Big flaw in the article: the company did not get started with a 75 Mil loan. They were enticed to move from Massachusetts to Rhode Island with the promise of a government backed loan. They were actually fairly well set up in MA, they have not even begun to meet the terms of that loan, they have not hired the people they said they would, and a lot of the employees are transplants from their MA operation.

Posted:2 years ago

#4

James Brightman
Editor in Chief

239 361 1.5
@ Christopher, thanks. It's been adjusted.

Posted:2 years ago

#5

Meelad Sadat
[a]list daily editorial director

51 30 0.6
Apparently the amount the state's in for comes to more than $100 per RI citizen. Mass politicians are going to have a field day with this one.

Edit: Mass = Massachusetts

Edited 1 times. Last edit by Meelad Sadat on 18th May 2012 7:14pm

Posted:2 years ago

#6

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