38 studios Auction Nov 14th and 15th.

Ambiturner · Dec 24, 2013

To be fair to RI, for the average schmoe who doesn't know more than general talking points abs headlines, not selling it looks better than the 300k figure that was mentioned.

It isn't better, oft course, but that rarely matters

Denaut · Dec 24, 2013

Schilling is apparently still living in a fantasy world where he isn't a colossal fuck-up that never deserved a single dime from anyone let alone the state of RI. Chafee correctly cut the state's losses when 38 missed their loan payment, and Curt should stfu.

OneofOne · Dec 24, 2013

Can't say I agree 100% with that. I think if they could have shoved something out the door, then spammed Shilling's, MacFarlane's, and Salvatore's names to high heaven, while the state may not have gotten the full loan covered, I think they may have gotten a helluva lot more than they are getting now. We'll never know for sure of course, and people will always argue about throwing good money after bad, but if your sole goal was to take the smallest hit possible, I think the state would have been better off helping them finish.

38 Studios should never have been offered the deal in the first place, but once tax payers were involved, Chafee should have done right be them instead of grinding his personal axe.

Dandai · Dec 24, 2013

OneofOne_sl said:
38 Studios should never have been offered the deal in the first place, but once tax payers were involved, Chafee should have done right be them instead of grinding his personal axe.

That's my biggest problem with the whole deal. It's clear to anyone with eyes that this dude couldn't care less if he got the money back; he just wanted to embarrass his political opponents. Curt being an outspoken Republican made it all the sweeter.

Pasteton · Dec 25, 2013

It honestly depends on how much money they were away from finishing the project. If it took another 100 mil in loans, then shitcanning it and take the 75mil hit is still the better decision. If they could have had something releasable with , say, another 15mil, then it was incredibly retarded to stop it short

Zhaun_sl · Dec 25, 2013

Pasteton_sl said:
It honestly depends on how much money they were away from finishing the project. If it took another 100 mil in loans, then shitcanning it and take the 75mil hit is still the better decision. If they could have had something releasable with , say, another 15mil, then it was incredibly retarded to stop it short

I think this is the big question. Sadly though it is hard to answer even by experts. A bunch of politicians clearly have no chance.

Dandai · Dec 25, 2013

Don't get me wrong, 38 made some colossally ignorant and terrible decisions with how much they paid their employees and their benefits packages. I get that Curt wanted to treat his people well and try to attract top talent to his company, but when you're a new studio/company, you gotta run lean, even if you're backed by a multimillionaire, former allstar athlete. I don't think that 75 mil even funded them for a year - and they didn't haveanycashflow coming in until Reckoning released. IIRC they got shafted out of some bonus from EA because their metacritic rating was 1 or 2 points shy of the contractual agreement - another mind boggling decision.

Denaut · Dec 25, 2013

OneofOne_sl said:
Can't say I agree 100% with that. I think if they could have shoved something out the door, then spammed Shilling's, MacFarlane's, and Salvatore's names to high heaven, while the state may not have gotten the full loan covered, I think they may have gotten a helluva lot more than they are getting now. We'll never know for sure of course, and people will always argue about throwing good money after bad, but if your sole goal was to take the smallest hit possible, I think the state would have been better off helping them finish.

38 Studios should never have been offered the deal in the first place, but once tax payers were involved, Chafee should have done right be them instead of grinding his personal axe.

You are assuming they were capable of shoving something out the door, which they weren't. With a burn rate was $3.3 million a month they would have chewed through any additional money very quickly and then been in the same boat again only now the state would have sunk another few 10s of millions of dollars into a game that still wasn't out and probably still wasn't close.

Chafee correctly criticized the previous administration for this ridiculous waste of money and then hediddo right by the taxpayers of RI by not throwing good money after bad.

Denaut · Dec 25, 2013

Dandai_sl said:
Don't get me wrong, 38 made some colossally ignorant and terrible decisions with how much they paid their employees and their benefits packages. I get that Curt wanted to treat his people well and try to attract top talent to his company, but when you're a new studio/company, you gotta run lean, even if you're backed by a multimillionaire, former allstar athlete. I don't think that 75 mil even funded them for a year - and they didn't haveanycashflow coming in until Reckoning released. IIRC they got shafted out of some bonus from EA because their metacritic rating was 1 or 2 points shy of the contractual agreement - another mind boggling decision.

It was a pretty big mess, no doubt. I ran through the numbers up thread and the company's cost per employee wasn't crazy, just on the higher side of average, what killed them was having to serve their debt to the tune of something like $1.12 million a month, they spent $43 million of the $75 million loan in 13 months. They didn't spend the full 75 million, what happened was a portion of that loan, about 32 million, was held in reserve to release to 38 at a certain point if certain conditions were met. When they went broke Curt wanted Chafee to release the funds early and without the other conditions being met. Chafee instead (correctly IMO) decided that the State would lose less money in the end by using the reserve to pay down the debt instead of giving it to 38 to blow and still not release anything.

As for Reckoning, I don't think Metacritic had anything to do with it. As I understand it the publishing deal had that EA got paid back the money they spent on the project in full before 38 saw dime 1 and the number to get to that point was astronomical, something like 2 or 3 million copies. So 38 itself never made any money off of Reckoning.

Ukerric · Dec 25, 2013

Pasteton_sl said:
If they could have had something releasable with , say, another 15mil, then it was incredibly retarded to stop it short

Releasable and earning back how much?

At the point RI found itself, it had spent spend XX millions, there appeared to be no chance of finishing the product within the remaining X millions on the loan, 38S failed to secure additional funding (ding ding: no one believed them enough to pay? And we did?), and so the decision is: do we ante 25 more millions and hope we get more than 25 millions back, or do we fold? And what if they come back to us after those 25 millions and say, we still need 10 more?

At that level, any sane investor would move in and take over completely before investing additional money. That's the only way you can be sure it's not a con. But you're not an investor, you're merely backing loans (plus you're a state, running a game studio is not in your portfolio of public services). You can't decide anything else: you put a stop to it.

salumeth · Dec 25, 2013

I think the Gov. screwed them in that he made confidential information public. Not saying 38 was right or wrong, but it's hard to sell something when you have political figures who know nothing about games bad mouthing it.

spronk · Dec 25, 2013

looks like my prediction from 2 months ago was pretty close

spronk_sl said:
i'm sticking with my prediction from the other thread, the IP sells for 250k or so, nothing will ever be done with the actual things the guys at 38S ever did.

I didn't even know they owned the settlers of catan digital rights (LOL wtf) but yeah looks like everything sold for chump change and the KOA stuff nobody even wants to bother with. Its pretty funny and sad that the furniture they owned sold for more (~$1m in auction) than all their intellectual property.

hopefully all the employees that got screwed over by unmentioned bills are all ok, it'd be interesting to read an article kind of a "where are they now", I'm sure a few employees left the gaming world and are running their own restaurant, small business, etc and finding it far more satisfying.

And curt of course makes millions broadcasting on ESPN. I don't know much about baseball, does all this shit affect his chances to get into the hall of fame?

Byr · Dec 25, 2013

spronk_sl said:
And curt of course makes millions broadcasting on ESPN. I don't know much about baseball, does all this shit affect his chances to get into the hall of fame?

no.

Erronius · Dec 25, 2013

Denaut_sl said:
It was a pretty big mess, no doubt. I ran through the numbers up thread and the company's cost per employee wasn't crazy, just on the higher side of average, what killed them was having to serve their debt to the tune of something like $1.12 million a month, they spent $43 million of the $75 million loan in 13 months. They didn't spend the full 75 million, what happened was a portion of that loan, about 32 million, was held in reserve to release to 38 at a certain point if certain conditions were met. When they went broke Curt wanted Chafee to release the funds early and without the other conditions being met. Chafee instead (correctly IMO) decided that the State would lose less money in the end by using the reserve to pay down the debt instead of giving it to 38 to blow and still not release anything.

As for Reckoning, I don't think Metacritic had anything to do with it. As I understand it the publishing deal had that EA got paid back the money they spent on the project in full before 38 saw dime 1 and the number to get to that point was astronomical, something like 2 or 3 million copies. So 38 itself never made any money off of Reckoning.

And if memory serves, wasn't the requirement to have X employees part of it? Having the state try to force a company to employ a certain number of people before they hand them money simply illustrated, in my mind, how little the people with the state knew about the video game industry. I could see telling someone opening an assembly plant that they needed to hire at least 500 people (or whatever the number was in 38s case) but that sounds batshit insane for a developer. Of course I'm not sure that I can put all the blame on RI in this regard either - 38S itself should have known that arbitrarily hiring a fuckton of people just to get a loan could be an enormous mistake.

Some of the stuff at Glassdoor:38 Studios Reviews | Glassdoor

Pros? The people on the dev team were some of the best people I had ever worked with. The game we were working on, while it had its challenges, was fantastic. The mid-level managers, the ones who were in the trenches working on the game, were attentive, responsive and really cared about the dev team. It was just one of the best teams of which I was a member.

Cons? The company executives, while chastising the dev crews for not communicating enough with each other, provided little to no visibility into the financial state of the company. There was no detectable long-term plan for how were going to bring the game to market, let alone a long-term plan for the company's survival. Bad decisions were made by those at the helm that put us into a deal that forced us to hire people before we needed them. Finances were wasted on non-essential things. Did the company really merit a renovated 6 floor building with a kitchen on every floor and a 24-hour security staff?

While it has come to light that there were disagreements in management meetings over the decisions that were being made that ultimately lead to the company's demise, no one in the executive staff saw fit to share vital information with non-executives that could have saved many people from so much hardship. Companies go out of business every day, but more should have been done to mitigate the effects of this closure on employees and their families. In light of the disastrous shutdown, not one of the executives have come to employees and said 'I'm sorry'.

We were often told by management we would never work for a company that would treat us better than 38 Studios. What company officials seem to have forgotten or not realized is that how you treat employees in the bad times speaks just as much, if not more, to the quality of characters of the company's executives.

Advice to Senior Management? If any former 38 Studios executive reads this review, I hope they take this advice. Secretive behavior does not foster an open, collaborative environment. Be honest every day with the people whose livelihoods are your responsibility, no matter the unpleasantness of the truth.

Denaut · Dec 25, 2013

The deal was for ~400 jobs and they filled about half of them. There were some penalties for not hiring the agreed upon number of people, but I don't think 38 lasted long enough for them to come into effect.

I also disagree with you about the # of jobs being the state's fault. That is standard practice when governments offer companies a deal, the state brings money to the table and the company brings jobs to the table. I would assume Schilling promised 400 jobs, an astronomical number for any game company let alone a brand new company with only 1 product that was still in development, just to get more money. Either that or the shady fucks that pushed the deal through (against the will of the general assembly if memory serves) wrote 400 jobs into the contract just to make the ridiculous amount of money they were giving to 38 look slightly better even if the company itself didn't promise or want that kind of staffing (which also would explain why the those penalties were so light.)

Keep in mind the entire deal was backroomed by people that had a lot to gain by pushing it through. It wasn't like the state overwhelmingly thought it was a good idea and it had the will of the people behind it, the state itself got fleeced, big time, which is why this ended up such a big story. As far as I see it the people that managed to get the deal done didn't give two fucks whether 38 went bust or was a huge success, they got paid up front. This kind of shit happens all the time, rich men with power use it to make themselves richer by taking money from working stiffs. I think this part is important to keep in mind how the deal went down when you consider the "state's incompetence" in granting the loan.

Erronius · Dec 25, 2013

Denaut_sl said:
The deal was for ~400 jobs and they filled about half of them. There were some penalties for not hiring the agreed upon number of people, but I don't think 38 lasted long enough for them to come into effect.

Yeah, I was just throwing a number out because I didn't feel like digging the numbers back up, I even said that in my post.

Denaut_sl said:
I also disagree with you about the # of jobs being the state's fault. That is standard practice when governments offer companies a deal, the state brings money to the table and the company brings jobs to the table.

Of course that's the 'standard practice', but I wasn't questioning the practice in and of itself. I question the arbitrarily high number of people involved. And you hit the core of it when you said "...when governments offer companies deals...". My entire point was about the number of employees in question not being remotely realistic for the situation. Now, I'm not just plucking this out of thin air, this has been a point of contention since this all went down. There is no doubt that 38s had more than it's fair share of issues, but this issue is one that has caused a lot of people to question the EDC and wonder if the EDC itself may have contributed to the fall of 38S by tying a completely unrealistic number of employees to the deal in the first place. 38S probably should have balked at the demand, and the state probably should have been more realistic and not used a benchmark that would see 38S inflate their number of employees simply to satisfy the state's requirements.

http://www.abc6.com/story/19114420/t...unk-38-studios

Documents released from the Rhode Island Economic Development Corporation on 38 studios, as well as an unflattering Boston Magazine article, are painting an even grimmer picture of the deal. To get Rhode Island's 75 million dollar loan, 38 Studios had to hire a specific number of new employees, whether they were needed or not.

Ken Block, Moderate Party Founder and former candidate for governor said,"They had to create those jobs to receive the financing they got. And according to the Boston Magazine article, they were joking about Vice Presidents of Donuts, because they put people into jobs, but they didn't have anything for them to do, so it was draining resources."

Business owner Ken Black says tying the EDC loan, to a specific number of jobs created, was a fatal flaw that doomed Curt Schillings now bankrupt video game company

End Game: Inside the Destruction of Curt Schillings 38 Studios | Boston Magazine

There were a few catches, though. The loan deal stipulated that 38 Studios had to hit certain hiring benchmarks to access some of the funds. The company would unlock $17.2 million for creating 80 new jobs in the state by spring 2011, another $4.2 million for adding 45 more by fall, and $3.1 million on top of that for 125 additional jobs by winter.

So as the company moved south in April 2011, it embarked on a hiring binge. In its midst, Schilling seemed to be handing out important titles to anybody who asked nicely for one.?It became a joke,? one employee says. ?Oh, you are a VP of lunch? Oh yeah, I?m a VP of doughnuts.?Infighting inevitably resulted, with execs often giving conflicting directives to staffers. ?They didn?t work well together,? Schilling says of his bloated management team. ?I was amazed at the turf-building and protecting that went on.?

Denaut_sl said:
I would assume Schilling promised 400 jobs, an astronomical number for any game company let alone a brand new company with only 1 product that was still in development, just to get more money. Either that or the shady fucks that pushed the deal through (against the will of the general assembly if memory serves) wrote 400 jobs into the contract just to make the ridiculous amount of money they were giving to 38 look slightly better even if the company itself didn't promise or want that kind of staffing (which also would explain why the those penalties were so light.)

The former of your two suppositions here is you assuming that Schilling promised those jobs first (citation needed?), and the latter doesn't run counter to anything I've said - in fact it would completely support my last post. So I would ask you, why is it that you say you disagree with me and seemingly blame only Curt?

Denaut_sl said:
Keep in mind the entire deal was backroomed by people that had a lot to gain by pushing it through. It wasn't like the state overwhelmingly thought it was a good idea and it had the will of the people behind it, the state itself got fleeced, big time, which is why this ended up such a big story. As far as I see it the people that managed to get the deal done didn't give two fucks whether 38 went bust or was a huge success, they got paid up front. This kind of shit happens all the time, rich men with power use it to make themselves richer by taking money from working stiffs. I think this part is important to keep in mind how the deal went down when you consider the "state's incompetence" in granting the loan.

You realize I hope that I was using "the State" as a catchall phrase and that I did not, in fact, actually think that more people were involved than actually were?

Denaut · Dec 25, 2013

Ok, here is what I am trying to say (we can just use the term "state" from now on, that's fine). From the state's perspective they are "buying jobs", that is their negotiating point, in this transaction they want as many jobs per dollar as they can get. There is PROBABLY some standard formula for that (or maybe not, I don't know) or at least a target number it has for cost per job. If they offered him a deal, 400 jobs for 75M dollars, it was probably because they were targeting ~187k per job.

The specific # of jobs was negotiated prior to any deal being struck and Curt did not have to take it if it was a bad. I mean, he could have said no thanks, or taken maybe ~$19M for the hundred people he actually needed. I looks to me like he wanted as much money, flat, as he could get so with a wink and a nod said, "Yeah sure, I'll hire 400 people." Trying to blame the state for "making" him hire too many people is bullshit, he agreed to itbeforehand. He signed the contract, he took the money, he's on the hook forhispromise. I have absolutely no sympathy for him, as far as I am concerned he scammed that state.

Now I don't know if the state would have given him a comparative $ amount for fewer actual people, but I see no reason to think it wouldn't have. It sounds to me like a bunch of blaming someone else for your cock-up which is pretty much all he has been doing since this went down. He is about as mature as a teenager.

Siddar · Dec 26, 2013

RI was basically providing 100% of money to keep 38s running during time from when loan was made tell time when 38s collapsed. That's a huge reason for failure. Curt put his own money in at the start but once RI loan came through it was all RI money it seems. If RI had had demanded that say it only provide 50% of monthly cash burn for 38s then things may have turned out different. Over hiring to access more cash would have been much lower because other sources of cash would have cut the need to hire people to hit employment targets. Its clear 38s would have had to restructure how it was doing business allot sooner if RI hadn't of been such idiots with initial loan. Had that no happened 38s would have ether found more cash at the time before when the initial RI was made and maybe have had enough cash to have finished the game. The other outcome would have been 38s would have failed to secure other sources of cash and have collapsed before it received the RI loan. Then Curt would still be out money he put into 38s but would still own the rights to the game he was making and RI wouldn't have lost 90 million on 38s.

State should never be in a position where it is providing 100% of funding for a private enterprise. Doing so raises a huge red flag as to why a project can't be financed by non government sources if is intended to turn a profit.

So RI both screwed up in its initial loan and then screwed up even more with how it let 38s implode,

Ukerric · Dec 26, 2013

Siddar_sl said:
because other sources of cash would have cut the need to hire people to hit employment targets.

The real question is "what other sources of cash". 38S never managed to get any additional funding for its MMO. EA was ok for an almost-finished single-player game, but no one stepped up to fund Curt's real dream. So, it was "accept a RI loan with unrealistic conditions, or fold and close MY DREAM STUDIO". Can you imagine Curt doing anything else? It's a talking horse story.

(If you're unfamiliar with the talking horse metaphor, it goes like this: thief is arrested trying to burgle the king, and is going to receive the death sentence. Thief says he wasn't burgling, but getting into the stables because he wanted to teach the king's horse to talk. King agree to let him try and will execute him next year if he fails. When the thief's friend say he's dumb, the thief says "well, before next year, the king may die. I might die. The horse may die of no fault of mine. Or the horse may talk". Thing is, if you're left with nothing to lose, you're going to make any irrealistic promise, and hope something happens)

Flight · Dec 26, 2013

Ukerric_sl said:
The real question is "what other sources of cash". 38S never managed to get any additional funding for its MMO. EA was ok for an almost-finished single-player game, but no one stepped up to fund Curt's real dream. So, it was "accept a RI loan with unrealistic conditions, or fold and close MY DREAM STUDIO". Can you imagine Curt doing anything else? It's a talking horse story.

It wasn't quite that simple.

One of the biggest decisions that left the fate of 38S in the hands of the State was Curt refusing to give up stock in the company over a number of years while they were looking for investors. Remember this was at the time WoW was punching it's biggest numbers. There was money out there but Curt was unmoving on this.

Secondly, Curt was far too involved in the day to day. He employed Brett Close to run the company but that fell down because Close couldn't deal with the involvement of Curt and having to constantly report to and communicate with him on what was happening. Jen Maclean had been trying to act as a facilitator between the two and went on to get the job of CEO because she was open to this relationship with Curt.

Thirdly the loan deal with RI was toxic. There were considerable interest payments due from the off - based on the entirety of the loan which wasn't available to 38S - which had to be paid from the loans themselves. Combine that with the commitment to employing certain numbers and the money into 38S from the loan was considerably lower than it first appears. When you look at the details of the loan with the benefit of hindsight it was always going to bring the company to a point where the fate of the company was in the hands of the State - it was always going to need more money investing outside of the loan.

In summary I'd suggest two points :

1. Curt was too hands on and refused to give up stock in the company to get investment. This brought the company to the place where it ultimately needed more investment - whether that be from RI or outside - to deliver.

2. RI should never have offered the loan in the first place based on the conditions it imposed (early interest repayments and commitment to employee numbers). If it had done any research or had any knowledge of the industry it would never have made the loan. Going on from that I believe the State would have got all it's money back had it made the final decision on whether to further back 38S in favor of either offering further funds or holding off on killing 38S. I do believe the decision to close down 38S was a purely political move. Curt stated that he could have got outside investment if the State hadn't pulled the kill switch and I believe that too - it was probably the first time Curt was going to give up any considerable stock in the company.

Curt played a high risk game over a number of years in regard to keeping 82.5% of the stock for himself. I suspect he regretted a decision early in the companies life to give 4% to Doug Macrae for the Azeroth Insider software. (The rest of the stock was in the form of options to 38S employees). Ultimately he may well have still delivered - and probably should have been allowed to do so - but a career politican shut down 38S for political reasons.

38 studios Auction Nov 14th and 15th.

Ssraeszha Raider

Trump's Staff

Silver Baronet of the Realm

<WoW Guild Officer>

Blackwing Lair Raider

shitlord

<WoW Guild Officer>

Trump's Staff

Trump's Staff

Bearded Ape

Trakanon Raider

FPS noob

Ahn'Qiraj Raider

Macho Ma'am

Trump's Staff

Macho Ma'am

Trump's Staff

Bronze Baronet of the Realm

Bearded Ape

Molten Core Raider