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Politics as Usual: 38 Studios debacle has been Chafee's finest hour (OPINION)

June 13, 2012

Lincoln Chafee has had some stumbles in his first term as governor, but his performance handling the 38 Studios debacle has been his finest hour.
To put it in video game terms, he picked up the sword and shield and went out to tame the fire-breathing monster before it could do further harm to the citizenry. If he didn’t exactly save the day, he at least minimized the damage.
But the Chafee haters – for instance, some of the folks on talk radio and in the comments section of various publications, blogs and websites – steadfastly refuse to give him any credit and, in fact, try to point the finger of blame at him for this trainwreck. Shame on them, particularly the ones who know better but are trying to score cheap political points. Many of these same people idolized former Gov. Donald Carcieri, who really deserves a heaping helping of the obloquy for this mess.
These folks have to grudgingly admit that Chafee was vehemently opposed to this deal as a candidate, so they huff: “Well, he was chairman of the board at the Economic Development Corporation (EDC) for 17 months, why didn’t he do anything, where was the oversight?” They are joined in that criticism by General Treasurer Gina Raimondo, who has demonstrated recently that she has a couple of sharp political elbows and no qualms about ramming one right into the governor’s gut when the opportunity presents itself. She is clearly looking to elbow Chafee right out of the governorship in 2014.
But that criticism misses the mark.
It is a good criticism, but it should be applied to former EDC Director Keith Stokes. The EDC chairman has a big-picture job of setting the direction and mission of the agency. The day- to-day operations, like checking in on 38 Studios and making sure everything was as it should have been, was Stokes’ job. If 38 Studios was hemorrhaging money to the point where it was going to run out and lay off all its employees after blowing off a payment deadline to the state, it was the staff’s job to be on top of that and sound the alarm. What did Stokes think was the point of those monthly EDC board meetings? But that alarm never sounded until way after it was too late.
The job of the EDC chairman is to fire the director when it becomes clear that the job he has been doing is woefully inadequate, such as when a $75 million deal crumbles through his fingers. That is exactly what Chafee did. Chafee called it a “mutual agreement” and Stokes said he was looking forward to spending more time with his family (He really did! Swear to God!). But Chafee canned him.
Demanding resignations to exorcise the EDC board of any members who voted in favor of the deal back in 2010 might be a bit of overkill, but Chafee says he wants a “fresh start” and being right up until now has probably earned him that call.
The governor did other things right as well. He moved to limit (to $10 million) the amount any one company could get from the EDC loan program Schilling used as his personal piggybank to the tune of $75 million, and now he has a bill before the General Assembly to not allow companies to use money they got from state loans or loan guarantees to qualify for a motion picture tax credit, a practice he correctly characterized as “double dipping.”
If there is one person who deserves the lion’s share of blame for this fiasco, however, it isn’t the governor or anyone at EDC. It is onetime right handed red Sox hurler Curt Schilling.
Schilling is not a gifted artist, he is not a master at creating cool computer code, he’s not even a business numbers guy. Schilling is the celebrity jock/CEO; his sole function at 38 Studios was to schmooze big-time investors and attract capital to his company. He didn’t get it done. Even before he found a bunch of suckers in Carcieri and the General Assembly leaders, Schilling was striking out all over the place trying to get people to finance his joystick fantasy. We now have reports that, long after his boat was clearly taking on water, he spurned investors who wanted an equity stake in the company. This was his ship, and now he is going down with it, sucking about 100 million Rhode Island taxpayer dollars down to the bottom with him.
Now he, too, is lashing out at Chafee and trying to blame the governor for his shortcomings.
Apparently, Schilling saw Chafee’s function as keeping his mouth shut about the increasingly obvious troubles at 38 Studios and to keep pumping your money and mine into his quixotic enterprise. Given the extent to which he wanted the state to be his sugar daddy, he should have named his game Kingdoms of Rhode Island.
Schilling’s behavior and statements are clearly those of the hopeless dreamer: if this one next step is taken, everything will just fall into place. If only the state had come up with the $8 million in motion picture tax credits, oh, the outside money would just come rolling in. Nonsense! Another $8 million in movie tax credits, if his company actually qualified for them and got it, would have kept the lights on for another two months while his massive honking multi-player game was a year or more from completion. He thought he could attract investors without letting them know the company was running out of money fast. That he couldn’t do that wasn’t the governor’s fault.
Chafee was right to turn off the spigot when he did, and when he did it, he had a responsibility to explain what was going on to 38 Studios’ biggest investors, who were, of course, you and me and all the other Rhode Island taxpayers.
As I tweeted last week, Schilling loaded the bases then walked the winning run in; now he is trying to blame the umpire (picture Chafee wearing an iron mask, standing behind the batter and catcher with a chest protector under his jacket).
I don’t want to paint Schilling as evil, he is just incompetent as an entrepreneur and he chose an industry that, as Chafee likes to repeat, “punishes people who don’t know what they are doing.”
Schilling put together a top-flight team of people who are immensely respected in the gamer world; they created a game that sold more than a million copies in three months. It is just that, despite that success, he never had the money to realize his dream and could never get enough people to believe in him and bankroll that dream.
It’s a shame, really. As the song says: “If mercy’s in business, I wish it for you; More than just ashes when your dream comes true.”

Jim Baron covers politics and the statehouse in Rhode Island for the Rhode Island Media Group and his views are his own. He can be reached at

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