End Game: Curt Schilling and the Destruction of 38 Studios

Curt Schilling set out to build the greatest video-game company the world had ever seen, and to get rich — Bill Gates rich — doing it. Instead, the whole thing exploded in his face. Drawing on exclusive interviews with the Red Sox legend and his former employees, Jason Schwartz takes us inside the chaos, arrogance, and mistakes that led to the destruction of 38 Studios and the loss of $75 million in taxpayer money.

On March 6, 2010, Schilling hosted a fundraising event at his Medfield home. Then-Rhode Island Governor Donald Carcieri attended, and the two men got to talking business. Schilling needed money. Carcieri was looking to beef up his state’s high-tech sector.

The talks continued for months, with the outline of a deal to move 38 Studios to Rhode Island gradually taking shape. At one point, Schilling approached Governor Deval Patrick and asked for tax incentives to keep the company here, but Patrick politely passed. Given the warning signs flashing around 38 Studios, it remains difficult to understand why Rhode Island so freely handed over $75 million. But for Schilling, despite being a longtime proponent of small government, the guaranteed loan was a godsend. He’d get the cash without having to give up even the tiniest slice of ownership. And if everything went bust, it would be Rhode Island that was responsible for the money.

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.”

The people working under Schilling had their own complaints about him. One says that he’d undermine managers by randomly dipping in to give direct orders to employees: “His requests added significant work, and were often contrary to the direction given by other people.” Former staff members also charge that Schilling was stubborn and ignored people when he didn’t like what they were saying. For instance, sources say Schilling froze out his vice president of business development by excluding her from meetings. “Once Curt turned on somebody,” a former employee says, “you went from being a superstar to he doesn’t want to talk to you, overnight.”

Schilling disputes much of this, but 38 Studios churned through a litany of executives during its existence. One former employee says Schilling appreciated that there was a lot he didn’t know about video-game development, and “tried to hire some of the best people in the industry to shore up those gaps. The problem is if you don’t listen to those people.”