End Game

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.

Whatever the dysfunction at the executive level, most employees at 38 Studios were unaware of it, and remained happy at the beginning of 2012. There was great excitement in February when the company released Kingdoms of Amalur: Reckoning, a single-player title produced by Big Huge Games. It did well, selling 1.3 million copies.

Schilling, meanwhile, kept up his free-spending ways. This past Christmas, he personally bought every staffer a computer tote bag with the 38 Studios logo. Add in the company’s high staffing levels, frequent gratis lunches and dinners, and big travel budget, and it was easy to forget the whole thing was a startup. “We never had that sense of urgency or panic,” Schilling tells me. “I think there was a sense of invulnerability — I don’t want to say invulnerability, but I think we were comfortable.”

Deadlines were frequently missed, something for which staffers say Schilling rarely held anyone accountable. The ex-pitcher had a bigger concern. “The game wasn’t fun,” he says, unprompted, beside the softball field. “It was my biggest gripe for probably the past eight to 12 months.” Visually, Copernicus was stunning, but the actual things you could do in the game weren’t engaging enough. The combat aspects especially lagged. Schilling — who never wavered in his belief that the game would be great — says the MMO was improving, but after six years, it still wasn’t there. When Schilling walked around during lunch hour, he says, nobody was playing Copernicus’s internal demos. They were all on some other game.

By mid-March, a year and a half after moving to Rhode Island, 38 Studios had received $50 million from the state and had burned through nearly all of it. Because of the way the deal was structured, that would be all they ever got. So Schilling put up $5 million worth of gold coins as collateral for another loan, this one from Bank Rhode Island. Despite the money crunch, however, he brought in two new executives in March, one of whom moved from Texas. That same month, 38 Studios stopped paying vendors like Blue Cross Blue Shield. It had already been ignoring bills from Atlas Van Lines for some time.

Adding to March’s chaos, CEO Jen MacLean, who’d been feuding with Schilling, suddenly went on leave. Her colleagues — and the press — were led to believe it was because of her pregnancy (she was roughly six months in), but according to a company source, MacLean’s departure was not for medical reasons.

38 Studios was at its most desperate juncture yet. On May 1, a $1.125 million fee payment on the loan from Rhode Island was set to come due. And both the company and Schilling were all but tapped.


  • Jan Dumas

    I am surprised that 38 Studios never contacted the large gaming and Science Fiction communities. There are conventions he could have attended with samples, with single player versions of his game. Gaming groups that would have given him real feedback on his game. And many many people who could have helped him build his company before building him game.

    He is a great base ball player, skilled in the fundamentals of the game, he should have learned the fundamentals of business.

    • Christine

      Only problem is, by Curt’s own ommission the game was all eyecandy and no substance. In this current MMO market, it would’ve flopped miserably if it’s core gameplay was so weak and the only thing on par was it’s visuals. There is no way they could’ve revamped the entire core of the game in time for 2013 launch; the game was just a moneysucking liability at this point and floating it with more money would have just delayed the inevitable.

      • John

        Arguable. Some MMOs with really bad mechanics, but are flashy or have wide open visual editting of their character do well. Some MMOs rely on their good gameplay. The key is though that you need the pros to outweight the cons. And without a living copy of the game, I’m not sure we can decide that.

        Both exist in the world and it’s impossible to say whether or not their dream project could have enough flash to make up for their lack of substance.

  • Robert

    Schilling and his defenders like to say he’s out more than other people (like those who moved to Rhode Island and had to drain their personal savings to pay unreimbursed moving costs, health insurance, etc) because he lost $50 million. If you have $90 million over however much Mr. Schilling had, and you lose $50 million, your life is not substantially different. You can pay bills, keep your mansion, send your kids to college, AND PAY YOUR HEALTH INSURANCE. Mr. Schilling left hundreds of families bankrupt and many homeless. They don’t have millions to fall back on. And let’s just suppose for the sake of argument that Mr. Schilling lost all his cash. So what. As a rich person with a financial adviser, the second things started to go bad, he had options. I’m sure his financial adviser had him do money hiding things (which are all legal and any competent adviser would do them) like gifting money to family members or buying real estate in a state like Florida. You see, in states like Florida, if you declare bankruptcy or even get a personal judgement against you personally, you still get to keep your “home”. So Mr. Schilling probably has a $10 million home somewhere that no one can touch even when (not if) he is found liable for damages. Also, even if he ended up completely penniless, he’s still Kurt Schilling. He could walk into the Home Shopping Network tomorrow and cut a multi-million deal for memorabilia and autographs. He’s not going to be homeless, he’s not going hungry, he’s not even going to have to cut down on the premium channels on his satellite tv bill. So don’t dare say “He gave $50 million, so he’s hurting more than anyone.” because hurt is relative. The “little people” in his game company may have lost “only” tens of thousands of dollars, but that was all they had. Most will be able to recover, but they’ll (unlike Mr. Schilling) will have to work long and hard to get back to where they were before this whole fiasco. Their security and quality of life is going to suffer for the next few years. Their kids are going to have to go to public schools and take government handouts. Those are the ones who gave the most to Mr. Schilling’s folly.

    • Tim

      What an insightful assessment of the situation! I was thinking the same. He can’t afford to fork over a few more million to make things right, yet he was soooooo very concerned about his employees? Bullcrap. He has the money, and if he doesn’t, he can get it. “What are we going to do in case of failure?” needs to be a question, however bitter, all businesses have an answer to, as well as “At what specific point will we consider the venture unsuccessful?”. But the biggest mistake was in exorbitant spending/hiring. Seeing as this was going to be a drawn-out development process, the fact that they were spending 4 million a month should have allowed them to forecast failure long before it occurred.

      • KevinNYC

        It said he earned 90 million over his career. It didn’t say he HAD 90 million after his career.

        Taxes, expenses, spending, etc. The guy is not going to be a pauper, he probably still had a nice house and nice cars, but he definitely took a hit too.

        • http://madhaberdashers.wordpress.com Dan Z

          You assume that he had 90 million left after his career. Let’s assume that he took that money home and that none of it went to taxes, agent’s fees, his accountant, all the stuff that it does go to. He owns a house, he had 5 mill in gold coins (that are now gone) he probably took some pretty luxurious vacations, owns some pretty expensive cars, how much do you think he had left? There’s hundreds of sports stars who go bankrupt every year, this is going to be another one, he might have a ton of assets, but not enough cash to fill the tank in his car. Before asking him to front more money why not ask what might keep him from doing it.

      • Sarge

        The article itself says he doesn’t have the money to pay the wages. If he did, given how much he spent on the project and employees during the lifetime of the project, I have no doubt he’d cover it.

        • Kirk Bilder

          You have no doubt? I guess you didn’t work for Schilling. Alot of the money he spent was for unnecessary stuff. Buying things he thought were cool or made him fee like a big shot. Not necessarily what was needed or even wanted.

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  • Jac

    Schilling should be in prison, and his personal assets should be liquidated to cover the wages and expenses he owes his former employees. Trying to run a company and failing is one thing. But deceiving employees into continuing to work even when disaster is on the horizon…continuing to throw money away even when you know ordinary, non-millionaire people are depending on their paycheck to pay rent and medical bills…that’s evil. It’s borderline sociopathic, in its utter disregard for the hardship and suffering of others.

    I can’t believe it’s even in question as to whether he’ll be held responsible for his obligations to the people that worked for him. As always, it’s the regular, run-of-the-mill worker who gets screwed the hardest in the end.

    • John

      He did state though that it was their option to come in and work or stay home. Most of them came into work out of belief that either their best chance of making money was there or out of loyalty.

      They made their choice to work for nothing and were subsequently burned. But they chose to stick.

    • josh

      i was head of security at 38 studios and what i saw of how much money was being spent was totally insane…there were days where big rig trucks would show up at 1 empire plaza on providence and 50 – 100 cases of beer were off loaded into the studio for various parties and events that went on often, every week. in the studio everything was free….high end coffee machines with exotic coffee…free drinks…free beer….catered meals everyday. it was ridiculous. i used to think to myself…wow so this is the life of millionaires. one thing in curts defense is what i saw is he did take care of his people,but splurged on everything…it was like a pro baseball clubhouse. .i did not know much about the video game process, but from what i saw i figured everything was peachy….guess not…i was laid off in march 2012..that is when builing security ceased at 38 studios…..but i did get a bunch of awesome baseball memorabilia signed by his greatness curt schilling.

  • John

    It’s really just a tragic story… I think every avid gamer has dreams of striking it rich/winning the lottery and using that money to build the game of their dreams (I know I do). This guy actually had that shot and went for it, which makes this something of a cautionary tale.

    It’s really not hard to see where it went wrong though. Because the cash flow model for the video game industry is so lopsided (it basically all comes after development is over, less relatively small financing cash flows during the course of development), typical game developers have only a very small team working on a game during most of its production. Only during the final push, once all the design work is finished, are teams ramped up to fill out the game content. Ramping up too early, or miscalculating how long it will take to complete a project, has been the death knell for a great many developers over the years. In that sense, the case of 38 Studios is neither unique nor precedent setting. Only the celebrity status of the founder and political ties to Rhode Island have made this news versus the many other studios that have died to exactly the same sort of financial mismanagement before 38S.

    It may not be unique in the history of video game development, but it’s always sad to see a dream die and cause so many collateral tragedies among the former employees.

  • Dan

    This is actually a pretty common story in the gaming industry. Not at this scale generally, but common enough. Many industry vets can tell stories of their last paycheck being the computer at their desk and anything else they can grab.

  • jon

    This is the guy who turned the moment of New England’s greatest triumph into a political event by endorsing W during post-game revelry. Endorsing him against the senator of the state he played for. It was the ultimate in p***ing on the parade, it tainted the experience for me and many others, and I’ll never forgive him for it. I’m sorry that so many worthy people have had to suffer for his foolishness, but for a Republican to whine about the taxpayers of Rhode Island not giving him enough money to throw away is the ultimate in hypocrisy. Get thee behind us, Curt.

    • Theresa

      You mean you changed your opinion of Schilling after the first Red Sox WS victory in 86 years because of his POLITICS? How sad. How much has the democratic party really done for you? You must be getting some kind of government money yourself. Pathetic.

      • Kirk Bilder

        You mean YOU think a baseball championship is more important than politics? Now THAT’s PATHETIC.

        I can’t speak for Jon, but it matters to me what progressives (very few of them in the Republican Party) have done for this country to try to ensure social and economic justice for all.

        But no matter what side of what political issues you’re on, you’d be an idiot or a fool to believe a baseball title matters more.

        To follow your lead, You must be getting some kind of baseball money yourself.

    • profile

      jon wrote:
      “This is the guy who turned the moment of New England’s greatest triumph into a political event by endorsing W during post-game revelry. Endorsing him against the senator of the state he played for. It was the ultimate in p***ing on the parade, it tainted the experience for me”

      made it that much more jovial for me

  • God’s Advisor

    I don’t understand any of the people who thought because a guy could throw a ball he could run a company as it’s founder, visionary and over-ruler of industry pros. This is a guy who went to Junior College, probably blew off classes to pitch, was treated as a Diva during his career and practiced nepotism at his first chance.

  • John

    I’m an avid World of Warcraft player (well…used to be anyway), and independent businessman, and fascinated by this story. I really wanted 38 studios to come up with something great. I feel really bad for everyone involved, Schilling’s family too though I think he made aweful mistakes and did some unethical things towards the end.

    I think this is a bigger part of American capitalism where people blow other people’s money away and then walk away with millions but the little guy has no recourse and no health insurance. It’s 2008/2009 re-enacted in a way.

    I also think it’s part of the illness that plagues the game industry, especially the MMO industry. Honestly, for all the money that’s sunk into MMO’s the game makers give us very little in return. Instead they studios heads blow money like Schilling and the programmers get free tote bags and laptops they don’t need while they play other games when they should be figuring out how to make the MMO they are working on better.

    So on one hand I feel bad for all of them, but on the other, I think they all get what they deserve… Schilling AND his design team.

    Hopefully, there will be better companies and better game designers to come up with better games and disrupt the complacent MMO gamespace that is at this point held back by the supremacy of WoW.

  • John

    Harvard University should throw out the Edsel marketing study and use the “38 Studies” for their students. 379 employees for a one item company which was never marketed. Bill Gates did it in the beginning with two people. It only took 9 people to win a game.

  • Ken

    Over and over again, we hear the charge that Schilling was a hypocrite for spreading Republican agitprop; i.e., big government bad, small government good. But it wasn’t just that; he’s implicitly a promoter and defender of true Republicanism and its attendant battle cry : “get the government off our backs.” He loathes government as burden, but embraces government largesse. Curt-types hate the New Deal, unless there’s a good ‘deal’ in it for them. He and his Free Marketeer brethren demand that the government “get out of the way,” but apparently only after they’ve fattened up at the gummint trough. But Curt, like everyone else who ventures into “the market,” learned the brutal truth of the market jungle : Pigs get fed, but hogs get slaughtered.

  • Jack from RI

    It is truly amazing that Schilling still is trying to blame others for his failing. He’s clearly upset that the Governor of RI refused to engage in a cover-up of the dire financial condition of the company in an effort to trick future investors – not to mention an effort to dupe RI taxpayers into giving even MORE taxpayer dollars.

    Can you imagine the scandal if Governor Chafee actually did what Schilling WANTED him to do? And he still insists that Chafee WANTED the company to fail.

    Schilling clearly isn’t thinking rationally. Why would a sitting Governor actively work to undermine a company for which it had $100 million invested? That makes no sense.

    Yet, given how poorly run the company was (who’s idea was it to release their first game two months AFTER Christmas?) Chafee could not ethically or rationally give up tens of millions MORE taxpayer money knowing how quickly and carelessly Schilling was spending it.

    The true blame lies with Schilling himself, and the politically connected friends of RI House Speaker Gordon Fox who are the ones who made this deal happen – and made millions on the sale of tax credits for Schilling’s company

  • Sarah

    Very well written piece, however, a little too easy on Schilling.

    A few things I think deserved mention or more attention:

    1. The fact that, as Robert noted here, unlike many of the fired-by-email former 38 Studios employees, the Schillings will be just fine. They will have plenty of opportunities–simply due to their fame and connections–to make piles of money doing things that others are far more qualified for. Affirmative action for the elites.

    For instance, the same Shonda Schilling whose writing can’t be quoted without loads of “sics”, was recruited to “write” a book about autism. Yes, the Schillings have a son with the condition, but so do many far more literate and insightful people who will never get the opportunity to write a book about the subject.

    2. Schilling’s hypocrisy regarding “big government,” also noted by Robert and other commenters here and throughout the web.

    3. The prepostorous nature of the fact that, despite her husband’s history of boisterous, nasty, denouncement others’ actions, Shonda now stamps her feet and demands in her garbled English (gee, if we make it the official language of the US, will she have to leave?) that her family not be subject to similar criticism.

    And, keep in mind, the actions Curt made it his business to criticize so vehemently and publicly seldom had any affect on him or his family, unlike his own actions, which have destroyed the well-being of many other families.

    4. The nepotism. OK, the Uncle Billy blunders did get good coverage, but there’s more that could have been revealed and more discovered by deeper digging.

    I also would say that:

    5. Those who still think Schilling is a swell guy were over-represented in the article.

    6. The potential illegality of Schilling and company’s actions should have to been expanded upon.

    • Theresa

      Some good comments are overshadowed by your over-the-top grammar-schoolish criticism of Curt’s wife.

      • Sarah

        If you knew Shonda Schilling as I do you’d realize I was letting her off easy.

        Especially considering how she treats others who “displease” her.

      • Markus T

        Looks more like Mrs. Schilling’s behavior, not the criticism of it, is what deserves the grammar school label.

  • trudy

    Rhode Island taxpayers, of which I am one, owe a big thanks to our Governor, Lincoln Chafee, for not throwing our good money after bad.

    Schilling’s pathetic and despicable attempt to blame Chafee for Schilling’s business stupidity would be laughable if I weren’t fuming about the idiotic, corrupt RI pols, like former Gov Carcieri and the General Assembly leaders like Fox and Paiva-Weed and the EDC people who brought about this mess and whacked us in the pocketbook.

    Not one single normal person I know in RI thought 38 Studios was anything but a financial disaster waiting to happen from day one.

  • Kazz

    I cannot decide which is more delicious. The demise of that consumate baffoon Ketchup Curt or the demise of the Red Sox. The summer of my dreams. lOL
    In any case, how fitting that “small govt.” Schilling is crying over the lack of bailout by the state. Hope he and his low class wife end up collecting bottles on the street.

  • http://best-waterfiltrationsystem.org/ water distiller reviews

    This is actually a pretty common story in the gaming industry. Not at this scale generally, but common enough. Many industry vets can tell stories of their last paycheck being the computer at their desk and anything else they can grab.

  • dhhyey

    Hey, he can still sell the bloody sock.

    • http://www.facebook.com/people/John-Smith/1414167703 John Smith

      heh. he just did.

  • Dennis

    Not until we have become humble and teachable, standing in awe of God’s holiness and sovereignty. acknowledging our own littleness, distrusting our own thoughts, and willing to have our minds turned upside down, can divine wisdom become ours.
    J. I. Packer

  • adam

    this is why government should not loan to businesses, there is lack of risk for the developer . and by doing so the success rate for government funded businisses are low.

    • blank reg

      And as this article shows, the companies that apply for government financing are the ones private equity and VC companies have already run away from

  • Jason

    What’s conspicuously missing is the fate of Todd McFarlane and R.A. Salvatore. Both made out like bandits, if you ask me.

    • briancarnell

      Really? Bandits? Salvatore apparently worked for 38 Studios on a contract basis and was to be paid once the Amalur MMO was published and successful. Based on published reports, he didn’t end up with much at all from the 38 Studios debacle. Rather it sounds like he was drinking Schilling’s Kool Aid.

  • slimsh8ee1@yahoo.com

    Great article. Well written, concise, factual and objective. So for the man that said he couldn’t think of anything better than to make 50k New Yorkers shut up (Yankee Stadium fans), all it took was a few New Englanders (his people) to assist in wiping away his entire fortune.

  • OMFS88

    That picture looks a little eery these days…

  • Atticus Finch

    Big Curt, the fiscally CONSERVATIVE REPUBLICAN. Pathetic, and oh, so predictible. Screwed everyone in his path over, ROYALLY. He should be in jail for his dealings. BTW……anyone want to buy his HUMMER GOLF CART? Figures he’d own something so utterly ostentacious.

  • Mursha Basrag

    “and that his video-game developers worked too slowly.” The typical attitude of people that know nothing about software development/software management.

  • DC

    Leading your baseball team to victory against the Yankees three times in nine days IS NOT A VALID MEASURE OF POTENTIAL SUCCESS IN VIDEO GAME DEVELOPMENT! Why do so many of the great athletes think this way.. it’s retardedly ignorant.

  • The Johnny show

    Curt, thank you for Koar, your team did real good. Sorry about what happened. Thanks for the great game you put out, I love it.

  • Kylie Marie Summerling

    This man was nothing but a moron. He didn’t do his research, and spent money like a whore on a stolen credit card. Idiots who catch balls for a living can’t handle the real world. Wonder if his mother in law is giving him charity now.

  • steelerstwin

    Another “hand out for corporate welfare” conservative. The hell with him.

  • Smith_90125

    Who says the $75 million is gone? It may just be offshore. After losing $50m of his own money, maybe Schilling came out ahead at taxpayer expense.

  • Ereading Dot Com

    Every time I read stories like this, it really bothers me. Investors lose millions, which in the end make it that much harder for ethical, bootstrapping start-ups to raise the funds they need to succeed.

    Frankly, any startup with a $4 million monthly burn rate is just being run badly. Period. There’s no excuse for that kind of waste. For the past two years (since 2012, oddly enough), we’ve been bootstrapping Ereading.com’s consumer and investor information website and developing our business model specifically so we don’t have an unnecessarily high burn rate when we launch the production site.

    Having business experience is certainly valuable. But so is having some common sense. Mr. Schilling seems to be a talented sports figure who is sadly lacking that one critical element in his personality. Instead of free laptops, embroidered bags, expensive dinners, and the like, he could have built a social-betterment business model and donated a portion of any net profits to worthy causes. Then again, it sounds as if there never really were any net profits. The whole thing is just very sad: for Mr. Schilling, but more so for his employees and his investors.