Salvatore, Other 38 Defenders Well-Meaning, Probably Mistaken

It will be a long while before the increasingly unbelievable 38 Studios debacle makes any sense, but it is irrefutable that each new revelation makes the defunct developer look worse. The most recent bombshell – that a botched company relocation program may have left employees on the hook for mortgages on houses they were led to believe had already been sold – is just the tip of an iceberg that appears to include multiple violations of the loan agreement the studio made with the state of Rhode Island.

In light of these events, much has been made about comments given by 38 Studios founder Curt Schilling to Sean Hannity last March, that cast the millions of dollars in question in a seriously hypocritical light. Schilling complained about government involvement in the economy, specifically decrying ‘handouts’, a sentiment that seems absurd considering how much government money the company squandered on its way to oblivion. A post on Daily Kos blasted Schilling for these statements and interestingly, consulting writer RA Salvatore took to the comments section to defend him.

“38 didn’t go begging for a handout from Rhode Island,” Salvatore said. “Rhode Island offered to secure a bond for them when the credit crunch reigned, trying to lure them out of Massachusetts.” But Salvatore isn’t the only defender of 38 Studios. 38 Studios environment artist Victor Cortis has also spoken out, claiming that in fact, the loan payment 38 Studios missed on May 1 was actually “in assurance” they would receive $8 million in tax breaks, something Rhode Island reneged on. This, he seems to suggest, meant that 38 Studios was not obligated to make the payment. Somehow, this makes the collapse of the company (and the bounced employee paychecks) Rhode Island’s fault.

That take conflicts directly with the letter sent to 38 Studios by Rhode Island Economic Development Corporation Executive Director Keith Stokes. Referring to the original Loan and Trust agreement (which can be read here), the letter says “Pursuant to section 2.06A(b)(ii)of the agreement, on May 1, 2012, the obligor was required to pay the Annual Guarantee Fee to the Corporation”. It seems pretty clear cut that Rhode Island believed pretty firmly that the payment was an obligation unrelated to any conditions. 38 Studios seems to have agreed with them, because they certainly scrambled to make the payment, tax break or no tax break.

Here’s the thing: as a consulting writer (he worked on a contract basis for Kingdoms of Amalur and the now cancelled Copernicus), Salvatore is not privy to the private goings-on of the company. “I am not an employee, an officer, a stockholder or on the board of directors for 38 Studios,” he admitted in his comment. “I’ve worked with them since 2006 on a consulting basis and believed in the project (and still do) – so much so that all of my compensation is on the back end.” Similarly, as an environment artist, Cortis may be a highly skilled and technically valuable employee, but he wouldn’t be making company business decisions nor, likely, overseeing financial documents.

Furthermore, the rapid collapse and, let’s be honest, extremely shady behavior preceding it – again, they stiffed employees on their final paycheck – suggest a much more desperate and financially insecure organization than defenders portray. And we’re not the only ones who think so. Rhode Island Governor Lincoln Chaffee has demanded an audit to find out precisely what the hell 38 Studios did with all that money. And even if Salvatore and Cortis are 100% correct, it doesn’t exactly refute criticisms of the company’s conduct, or their management of millions of dollars they received from a cash-strapped state.

Clearly, we don’t have all the facts. But frankly, though they may be well-meaning – see Salvatore’s full comment for some nice thoughts about the people he knew – neither do Salvatore or Cortis. They may be speaking out on the company’s behalf, but 38 Studios executives certainly aren’t, and that says something too. As of right now, all we really know is that the stunning failure of 38 Studios has been accompanied by signs of severe financial mismanagement. Sure, maybe it will turn out to be just a spot of bad luck, but it’s still a bit rich for someone who knowingly takes money from the government to complain about people who take money from the government. Schilling may indeed be a very nice person, but you can be very nice and still be a major hypocrite. And it’s perfectly OK to call him out for it.

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1 Comment on Salvatore, Other 38 Defenders Well-Meaning, Probably Mistaken


On May 29, 2012 at 8:28 am

Well, since we seem to be in the mode of judging people (and organizations) in the absence of a complete understanding of what happened, let’s not pretend that just because some Rhode Island bureaucrat–or indeed Hizzoner the Guv–says something, that it is necessarily more true than what Curt Schilling says.

The fact that the corporate officers aren’t talking bespeaks a fear of the legal consequences of even well-meaning statements, in this Sarbanes-Oxley, Dodd-Frank driven world: it doesn’t necessarily mean they have anything to hide. We’ve all learned our lesson from Martha Stewart: anything you say to a Federal officer can land you in prison.

As to the many mistakes, bad judgments, and general self delusion that got 38 Studios to this pass, well…boneheadedness is universal. As Napoleon is said to have observed, you should never attribute to malice that which can be explained by incompetence.

Lastly, I assume I need scarcely point out that “stiffing [your] employees on their last paycheck” is generally a sign of desperation, not malice. If they’d managed a sufficient sell-through on the game to make good, we would never have heard about it. Furthermore, that argument leads to a position that I would have thought was the antithesis of the GameFront sensibility: don’t play in this game without the massive resources and backstop of a large, well-heeled corporation like EA or UbiSoft. After innumerable complaints about how boring it is to get yet another well-massaged iteration on a classic franchise, and how sad it is that there’s so little innovation in the field, it seems odd to hear GameFront condemning 38 Studios for having tried and failed.

As Theodore Roosevelt famously observed, it is a far better thing to have tried great things, even if you failed, than to have never tried at all. 38 Studios should be praised–yes, even in failure–not condemned.