Former Red Sox star Curt Schilling said Friday that his Rhode Island video game company, 38 Studios LLC, went bankrupt two weeks ago largely because it couldn’t raise more money from outside investors.
“One of the going concerns from Day One – and it was always something that we were cognizant of – is we needed to raise capital,” Schilling said in a radio interview on the Dennis & Callahan sports radio show on WEEI in Boston. “We tried for a long time to do that and it didn’t come to fruition.”
Schilling, who founded the company six years ago, said he personally invested more than $50 million in the company, in addition to $5 million to $10 million from other wealthy investors and a $75 million loan guarantee it received from the state of Rhode Island to entice it to move to Providence last year. But Schilling said it wasn’t enough to remain in operation until it could complete its flagship project, a online multiplayer role-playing game code-named Copernicus, which was scheduled to be released next June.
“The one thing we always listed as a going concern we couldn’t execute on,” Schilling said.
The interview was Schilling’s first since 38 Studios filed for Chapter 7 bankruptcy on June 7. The company laid off all its workers, roughly 400 people, in late May. The company reported it owed money to more than 1,000 people and companies, most of whom likely won’t recover any money. In its Chapter 7 bankruptcy filing, 38 Studios reported that it owed more than $150 million, mostly to the Rhode Island Economic Development Corp., and that it had less than $22 million in assets.
Schilling said he was “tapped out” and didn’t have anything left to put into the company to keep it afloat.
“I put everything in my name in this company,” Schiling said, adding that he wasn’t looking for sympathy. “I believed in it. I believed in what we built. I never took a penny in salary. I never took a penny for anything.”
Schilling could be personally on the hook for some of the losses. RBS Citizens, better known as Citizens Bank, sued Schilling for $2.4 million in loans to 38 Studios that it says Schilling personally guaranteed. He said he told his family last month that “The money I saved and earned playing baseball was probably all gone…Life is going to be different.”
The company, which missed its May 15 payroll, also reported that employees were owed millions of dollars in back wages. Schilling acknowledged that workers didn’t have any warning about the company’s financial troubles.
“The employees got blindsided,” Schilling said. “They have every right to be upset. I always told everybody if something were going to happen, you‘re going to have a month or two of lead time, and I bombed on that one in epic fashion.”
Schilling said the company collapsed quickly. He said the firm was on the verge of signing a deal with a major video game publisher worth as much as $35 million for a sequel to the first single-user game it released in February, “Kingdoms of Amalur: Reckoning.” But he said talks collapsed after Governor Lincoln Chafee publicly said a month ago that it was trying to find a way to keep the company solvent, the first public indication that 38 Studios was in financial trouble. Schilling also said the company didn’t immediately see an infusion of cash from sales of its first game, because the initial sales first had to be used to payback the game publisher, Electronic Arts, which had provided the company with an advance.
Schilling said an investor “at the end” promised to write a check for $15 million to $20 million to salvage 38 Studios if the state of Rhode Island agreed to give the company $6 million in tax credits and renegotiate the loan guarantee so the investor was first in line to be repaid. “If that happened, he would come in and save the company,” Schilling said. But the state refused.
In addition, Schilling said he was puzzled by comments accusing him of being hypocritical for seeking the loan guarantee and tax credits from the state of Rhode Island, despite his political advocacy for smaller government. He noted that tax credits were available to all companies that invested in film or video-game production in the state.
“I don’t know how that correlates to this,” he said.
Schilling added, “I don’t have any problem with government helping entrepreneurs and businesses.”