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Chafee’s scare tactics for political gain sabotaged 38 and Big Huge Games, says source

Friday, 1st June 2012 17:04 GMT By Stephany Nunneley

A Big Huge Games employee, speaking under anonymity with Gamasutra, has said Rhode Island governor Lincoln Chafee is partly to blame for the demise of 38 Studios and Big Huge Games. The source claims the governor, who was opposed to the deal cut with the firms by former governor Donald Carcieri, leaked incomplete information pertaining to the studios and frightened RI residents when saying they would be on the hook should 38 Studios fail.

According to the source, the $75 million deal cut by former-governor Carcieri using taxpayer-backed bonds was a key point in luring the studios from Massachusetts to Rhode Island. The deal would create jobs, and help boost the state’s economy.

Chafee was opposed to the deal from the start, and used tax payer anxiety in order to fulfill his political agenda, as 38 Studios founder Curt Schilling previously claimed – and former employees of 38 tend to agree with the statement.

“I don’t know how feasible [Copernicus] ever was, but it seemed to have modest expectations it would be able to achieve,” a former Big Huge Games employee told Gamasutra. “Once things went bad, Chafee’s office started leaking any information it could to make 38 Studios look like it had been a bad deal… unfortunately, a lot of these leaks involved partial and complete misinformation.”

One 38 Studios employee backed up the claim, stating that Chafee purposely spouted misinformation by designating the private loan cosigned by the state “taxpayer money” making it seem as though Rhode Island had already paid for the cost “instead of being responsible for it in the event of failure,” states the article.

Furthermore, Chafee claimed the $1.125 million payment, which purportedly bounced the first time around, was a loan payment – but it wasn’t.

“It was actually a weird extra fee to the board he was on, which had nothing to do with payments and interest — [which was] already handled by setting aside a full third of the loan for that purpose,” the 38 source said.

“This made it seem like we had somehow burned through all $75 million, including the money set aside to do this.”

Chafee famously said during a press conference last week that Kingdoms of Amalur: Reckoning had “failed,” and while it didn’t sell enough copies for EA to start paying a cut to the studio, profits from the game were “never part of the budgeting plans for 38,” states Gamasutra.

The additional comments regarding insolvency made by Chafee also scared away potential investors on top of the negative press caused by his comments on the game’s failure.

“As a result of all of the negative publicity and misinformation, the publishers we were talking with ended up distancing themselves from us and letting us collapse,” says a Big Huge Games employee. “In a real way, Chafee’s political maneuvering is responsible for the lost jobs of 107 entirely blameless professionals in Maryland [where Big Huge was based].”

You can read the entire thing through the link, and you should as it provides more perspective from the employees.

Here’s the link again.

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14 Comments

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  1. Night Hunter

    —political statement which I would like to withdraw because I don’t want to spend my day with trolls—

    #1 2 years ago
  2. DSB

    Why would you ever set aside 75 million dollars for any one business, unless it was the kind of huge corporation, which might benefit the state as a whole?

    Chafee might well be an asshole, but I don’t see how Carcieri could really defend that.

    And then of course it’s puzzling that if Chafee is guilty of libel, and it has had a direct impact on the business, why not sue? Sounds like an easy case to make, and I’m sure that money is needed for all the people who lost their jobs.

    It doesn’t really add up to me. I’m pretty sure there are lawyers who would take a case like that without money down, if it had merit. Winning a case against a governor for a small business that got screwed over? Career gold.

    #2 2 years ago
  3. Phoenixblight

    @2

    Simple the contract specified for 38 studios says that the state of RI can quit paying at anytime.

    #3 2 years ago
  4. Ireland Michael

    It’s because of twats like these that we’re in the economic shitpool we’re in right now.

    #4 2 years ago
  5. DSB

    @3 That still doesn’t explain all that much though. They got 50 million out of the 75 promised. The loan was apparently cancelled when it became clear that they were unable to pay any of it back.

    The accusation here isn’t that Rhode Island broke the contract, the accusation is that they slandered the company, to a point where it had a very serious impact on their operation.

    If that’s so, certainly you have plenty room to sue for damages. That sort of thing is not legal anywhere.

    I just get the sense that there’s another side to the story that really isn’t being explored here. How much did Amalur need to sell to break even, and how were these companies financed and run?

    Accusations are all well and good, but where’s the nitty gritty?

    #5 2 years ago
  6. Phoenixblight

    38 studios was going to flop when they got this deal they thought they had won the lotto going to schools and hiring students by the bulk and then creating a studio in RI. 38 studios doesn’t have a leg to stand on.
    The contract was probably more specific in saying that they needed to make a profit in order to get their last payment and since the game didn’t make a profit thats when all parts of this deal fell through along with EA not moving on to a sequel. 100 Million dollars for KOA development was absolutely moronic and 38 studios were putting all their eggs in one basket thinking KOA would make a profit. This is a prime example of people with a lots of money and no business sense.

    When I saw their recruiting agents come to our school in January getting students just barely in their first semester, I knew this company was going to bite it.

    #6 2 years ago
  7. ManuOtaku

    Newly form developers in the past only have to watch out for big publishers (activision, EA, etc), now they have to watch out for governors and governments too, pretty sad, i wonder if this situation would happened on a gaming state frienldy like montreal.

    #7 2 years ago
  8. Phoenixblight

    @7

    Newly formed developers shouldn’t be going for 50 million dollar deals in the first place. EA has a fund for indies that goes up to 5 million but they don’t throw that 5 million at one studio they spread it around to developers based on their team and work. If one of these studios makes them a lot of profit they get another deal if not it is not as damaging as something like this which now RI has to pay the bill.

    #8 2 years ago
  9. ManuOtaku

    #8 i agree, but i meant in the way they had been treated for the government, even if the RI state did pay all the bill, thats not reason for doing the things that are described here, and even if the deal was done with a former governor, the new one should had handle the thing in a different way, without this unfriendly tactics, even if he didnt agree with the past deal, he should do it the proper way, at least keeping in mind all the workers, and not only the owners thats his duty as a governor, thats why i indicated if this situation would have happened in the same way in a gaming friendly state, i dont know, but i think they would handle the things very differently IMHO.

    #9 2 years ago
  10. DSB

    What you have here seems to be unsubstantiated though. It’s not surprising that people from 38 Studios are angry, and it’s not surprising that people are pointing fingers.

    These guys are saying that he undermined their business by slandering them. That’s called defamation. That’s against the law. If they have a case, why not sue?

    I think it’s pretty suspicious that the source in this case is unnamed. Isn’t that a little convenient? The governor can’t sue an unnamed source for defamation, even if he has a case.

    Where is the proof?

    None of this happened until 38 Studios missed a payment on the loan given to them by Rhode Island. Once it became clear that they couldn’t pay, the government got involved and looked through all of their financials, at least supposedly in an effort to try to ensure the investment.

    Even if he doesn’t like the deal, or 38 Studios, I don’t see how a governor benefits from losing 50 million dollars and almost 300 high tech jobs on his watch.

    I think there’s a subtext here that’s getting overlooked: If you don’t want to get fucked, pay your bills.

    #10 2 years ago
  11. ManuOtaku

    #10 DSB
    “None of this happened until 38 Studios missed a payment on the loan given to them by Rhode Island. Once it became clear that they couldn’t pay, the government got involved and looked through all of their financials, at least supposedly in an effort to try to ensure the investment.

    Even if he doesn’t like the deal, or 38 Studios, I don’t see how a governor benefits from losing 50 million dollars and almost 300 high tech jobs on his watch”.

    I do agree, but again what i dont get is his attitude, he could sit with all the parts involve, and work for a solution, i mean he could said to this devs, tell me your paymant plan?, how do you plan to pay the state back?, i dont know, things like that, just do something to solve the issue, not make it worse with tactics like this, this in my eyes is telling me that he wouldnt care at all, i know this is peoples money, but he has to consider why the deal was done in the first place,what was the main goal?, making money at short term or long term?, or making the state developer friendly perhaps?, i dont know, but it seems to me he didnt care neither, if things were handled a little different maybe he could had saved the jobs, and in a mid term-long term window , got the money back, who knows?

    #11 2 years ago
  12. DSB

    @11 Well, at least officially, that’s exactly what he did.

    http://news.providencejournal.com/breaking-news/2012/05/ri-gov-chafee-m-1.html

    That’s really the problem here.

    I’m not saying he didn’t go into those negotiations with a foregone conclusion, but the burden of proving that lies squarely with the journalists, and 38 Studios/Big Huge Games.

    A statement from a person who won’t sign their name is not proof.

    By all accounts 38 Studios was an extremely poorly run studio. That’s included in the same Gamasutra article. Why would you invest in a company that doesn’t really know what it’s doing?

    I mean, wouldn’t an investor have every reason, when looking at a company that couldn’t even pay its employees, to say “I really don’t want to invest in this”? I would guess that 90% of investors wouldn’t even take your call under those circumstances.

    According to the Gamasutra article, 38 Studios nearly went down two times before, where they were saved by sudden mystery investors. Is it really hard to believe that investors, just by using their own common sense, would turn down the offer to bail them out a third time?

    So, the question you need to ask yourself is – Didn’t investors already have a pretty good reason not to invest in 38 Studios?

    That’s really my problem here. If there’s foul play, show us your cards. Don’t hide, don’t talk. Just bring the evidence.

    #12 2 years ago
  13. ManuOtaku

    “13 if thats the case, and if those were his real intentions, then i have not qualms here, really

    #13 2 years ago
  14. TheWulf

    Another manager making excuses for really poor management decisions. If 38 Studios hadn’t had utterly cretinous management to begin with, then they never would have taken out a government loan in the first place. Blame the people who provided the loan as much as you like, but it was the choice of 38 Studios to take out that loan. They weren’t forced at gunpoint to actually do so, it was their choice. Their poor choice.

    #14 2 years ago