Curt Schilling loves his MMORPGs (think Everquest or World of Warcraft). So much so that in 2006, he founded his own company to produce them. 38 Studios set up shop in Maynard, Mass., and got to work.
In 2010, the state of Rhode Island came a-calling. As part of the RI Economic Development Corporation's effort to create jobs in the state, they offered 38 Studios a $75 million loan, if only they would pack up operations and bring them to Rhode Island. Schilling and co. moved to Providence, and pledged to employ 450 locals. It was a gamble for the state, which only had $125 million for the entire job creation program, and took criticism at the time.
It's 2012, and 38 Studios is in trouble. They've only employed 288 Rhode Islanders so far, and the company recently had to pull out of next month's E3 showcase because their upcoming game, paid for by the loan, isn't close to being ready. An independent audit expressed "substantial doubt" about whether the company can remain solvent, and state officials have been meeting with 38 Studios in recent days.
The worst case scenario? 38 Studios goes under, and is unable to repay the loan. If that happens, taxpayers are on the hook for $112.6 million after interest is factored in. Maybe Curt Schilling was right all along: big government and the stimulus plan just don't work.
Update: Missed this the first time around, but worth noting. Last year Schilling told Reuters that he had invested "$30 million to $35 million" in 38 Studios. A disclosure filing obtained by WPRI shows that Schilling also recently advanced the company $4 million of his own money, and has already been paid back—with funds from the Rhode Island loan.