End Game: Curt Schilling and the Destruction of 38 Studios
Schilling set out to build the greatest video-game company the world had ever seen. Instead, 38 Studios exploded in his face. A look inside the chaos, arrogance, and mistakes that led to the loss of $75 million in taxpayer money.
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.
The sun is beating down hard on the Dracut High School softball field, where Curt Schilling sits atop a bucket of balls beside the dugout. He’s helping coach his daughter’s team, the Drifters, in a tournament, and they’re on the verge of their second win of the day. Schilling could use the uplift: It’s been a month since the extraordinary implosion of 38 Studios, the video-game company he founded and lost $50 million investing in. And though his face is not quite the ghastly shade of white it was at the height of his company’s crisis, he doesn’t exactly look good. Dressed in shorts and a standard-issue blue and orange coach’s polo, his facial hair is scraggly and he’s got heavy bags beneath his eyes.
“Come on! Let’s close it out!” shouts the former Red Sox star, noted during his career for his precision arm and considerably wilder mouth. Moments later, there’s a game-ending grounder to second. Drifters win, 9–0.
Despite keeping an uncharacteristically low media profile of late, Schilling has agreed to meet with me. So while the players wait for their next game of the tournament, the former pitcher takes a seat in a lawn chair and performs what winds up being an emotional, two-hour-long autopsy of 38 Studios. The company’s death was grisly: Before going under, it defaulted on the $75 million guaranteed loan that the state of Rhode Island had used in 2010 to lure it to Providence. As the money ran out, the company encouraged its 379 employees to continue coming into work, even though it knew it could not pay them. Staffers realized they’d been stiffed only when they noticed the money missing from their bank accounts. A pregnant woman had to find out from her doctor that her healthcare benefits had been cut off.
Add it all up, including interest, and already-cash-strapped Rhode Island could be out as much as $110 million on the loans. As Schilling sits beside the softball diamond, his company, with nearly $151 million in debt and just $22 million in assets, is being liquidated through Chapter 7 bankruptcy.
Asked about 38 Studios’ failure, Schilling says his management team suffered from “significant dysfunction” and that his video-game developers worked too slowly. Those problems, he allows, are his fault. “As the chairman and founder,” he says, “who’s above me?”
But he also shovels much of the blame onto Rhode Island Governor Lincoln Chafee, whom he believes had a political agenda when it came to 38 Studios. The day before, Schilling alerted his former employees through a private Facebook message board that he planned to go on WEEI sports radio to talk about Chafee’s role and “tell the untold side of this nightmare.”
Many former 38 Studios employees, including the CEO, responded to that Facebook post with fierce attacks against Schilling himself. As the assaults mounted, Schilling’s wife, Shonda, rose to her husband’s defense. “50 million its [sic] not a fucking joke. It’s gone,” she wrote, adding that, “You have no idea what that last two weeks were like. Hope and hell. We hung on every telephone call. My husband couldn’t function. My kids saw their father cry more in that month then [sic] any child should see.”
Schilling’s harshest critic in the online exchange was Bill Mrochek, the vice president of online services, whose wife required a bone marrow transplant at the time their healthcare disappeared. “Are you going to admit that your stupid hubris, pride, and arrogance would not allow you to accept that we failed — and help shut it down with dignity?” he asked Schilling.
Mrochek was talking only about 38 Studios’ dramatic final weeks, but as interviews with Schilling, members of his former staff, and others associated with the company show, he might as well have been describing 38 Studios from the moment that Schilling — lacking any business experience, but full of the same confidence, bravado, and determination that made him a baseball legend — decided he could build a billion-dollar video-game company.