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Rhode Island’s Solyndra cubed

Rhode Island’s Solyndra cubed

I haven’t had much time to focus on the debacle unfolding in my home State of Rhode Island and Providence Plantations over loan guarantees to a company owned by former Red Sox pitcher Curt Schilling.

This Bloomberg story has the latest:

Curt Schilling, pitching ace on the 2004 Boston team that won baseball’s World Series, may leave Rhode Island on the hook for $75 million of bonds sold to help lure his video game company to the state.

The former Red Sox fireballer yesterday asked the state for extra time after the Providence-based venture failed to make a $1.1 million payment to cash-strapped Rhode Island’s economic-development arm.

Schilling, 45, last year moved the company, 38 Studios LLC, from Massachusetts after Rhode Island lent $75 million from the proceeds of a debt sale in exchange for a promise to create hundreds of jobs. The state may be forced to repay the bonds if the company defaults on the loan, according to securities filings.

DrewM at AceOfSpadesHQ sums up the “what were they thinking” aspect of this:

450 people? To design a video game? I worked in the industry about 10 years ago on a game that became really popular and was sold to a major company for a metric butt-load of money (not that I got any of that). If there were ever more than 30 people working there I’d be shocked and they never got anywhere near $75 million in cash until they sold out.

Of course Schilling’s company only ever had 288 people working there anyway. 288 people? On development? For a game not even ready for preview at E3? Oh dear God! …

People in government don’t even know how to run a government. Why do they think they are qualified to be investors?

Via The Boston Herald:

As bad as Solyndra was for the U.S., it’s far worse for a small state like Rhode Island.

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Comments

People in government don’t even know how to run a government. Why do they think they are qualified to be investors?

OR regulate entire industries effectively on the macro scale.

Seriously? We vaunt the idea of “team decisions”, and their is ample evidence to show we should.

We think this whole “cloud” thingy is cool, and a “cloud decision” SHOULD be really, ultra cool.

And that is EXACTLY what you have in a market economy…cloud decisions, involving HUGE amounts of information, made by people in the MOST democratic manner imaginable, with inherent checks and balances.

DrewM makes this remark:

Of course Schilling is a “conservative” who is happy to take government money (that he used to pay himself back money he “lent” his company) and now wants even more money from Rhode Island. It seems all this money apparently comes from Obama’s so-called “stimulus”.

According to Wikipedia, Schilling campaigned for Bush and McCain. I remember the speculation that he would run for Ted Kennedy’s vacated Senate seat.

If we’ve forgotten Schilling’s political affiliation, the Left will remind us. 🙁

    Awing1 in reply to gs. | May 17, 2012 at 11:10 am

    That’s the left’s problem, they’ll think Shilling is the one who “did bad”. Shilling no doubt did what he felt was economically rational at the time, as did the people who invested in the bonds. The irrational actor was, and almost always is, the government in the middle. The investors in the bonds didn’t care about Shilling’s company, they lent money based on the state’s creditworthiness, not Shilling’s. Without a watchful creditor worried about getting repaid, Shilling likely took greater risks, because it was rational to do so since it wasn’t his money.

    But alas, it will be seen as either the evil business owner’s fault that the state has to pay, or the evil creditors fault, rather than the government that irrationally made the deal in the first place.

      gs in reply to Awing1. | May 17, 2012 at 12:06 pm

      IMO not enough information is public to allocate responsibility between the government and Schilling’s company. I don’t see how to absolve the government, but it’s possible that Schilling’s company materially overstated its business prospects. It’s also possible that Schilling is a front for people who have not yet been identified.

      Just as I am not ready to absolve Schilling et al, I am not ready to absolve Solyndra management. I am not ready to absolve reckless Wall Street players who walked wealthy away from the rubble.

        Awing1 in reply to gs. | May 17, 2012 at 12:09 pm

        Material misrepresentation would be fraud. I don’t think it’s fair to assume as your default that a crime occurred without any evidence to suggest that was the case.

          gs in reply to Awing1. | May 17, 2012 at 12:33 pm

          1. My previous comment has no such default assumption.

          2. To return to the original post: In view of Schilling’s GOP affiliation, the administration might be more conscientious about investigating the RI situation than they are about Solyndra.

Midwest Rhino | May 17, 2012 at 11:36 am

Government is certainly not competent to invest or micromanage. But what individual politicians now get elected for, is to use their position to bestow special favors to “special people”. Those chosen ones may be donors or family or whatever.

We just need to know what made Schilling so special to these politicians. Quid pro quo is bad … but when spending taxpayer money, the standard return is more like 100 quids for every quo. Or maybe there were just some Red sox season tickets in the deal …

Schilling campaigned for Bush and McCain? That doesn’t make him a conservative. Of all the people needing a handout from government, it sure wouldn’t be Schilling.

    Schilling campaigned for Bush and McCain? That doesn’t make him a conservative.

    The distinction between a Republican and a conservative may not be important to the swing voters who will decide the November election.

    (No true Scotsman?)

    Of all the people needing a handout from government, it sure wouldn’t be Schilling.

    Many people who don’t need a handout still go looking for it. Many people who don’t need more money still crave more.

    Moreover, I’ve seen reports about athletes who retire rich and wind up broke.

      Midwest Rhino in reply to gs. | May 17, 2012 at 12:38 pm

      it seems as I recall from what Drew wrote over at AoS, that Schilling actually got repaid a bunch of his investment from the government funds. If true, it would be a Schilling personal bailout more than any sort of investment.

      I suspect some sort of shenanigans. Maybe Schilling and Clemens could end up doing some time together? heh

        …Schilling actually got repaid a bunch of his investment from the government funds. If true, it would be a Schilling personal bailout more than any sort of investment.

        You emphasized an important point. It seems possible that Schilling lent the money instead of buying stock in order to position himself as a creditor instead of a shareholder if the company liquidated.

        Suddenly I have more insight into the annual reports from a start-up that I used to work for… 🙁

        SeanInLI in reply to Midwest Rhino. | May 17, 2012 at 4:05 pm

        Schilling was an early investor to the tune of $10s of millions, and then brought in other investors. Later on, when the company started having cash flow problems, Schilling issued the company of $4 million line of credit, which was separate from his initial investment.

        The loan from RI paid off his and other lines of credit, as well as vendors.

Here in Michigan we have been dealing with governments massive failures acting as Economic Development Corporations for a very long time, in fact, I believe about 150 years ago Michigan Constitution barred state intervention in private sector economic affairs because of failures in the railroad industry…

Among the many recent failures there stands Google, where the state promised tens of millions in return for promises of 1000 jobs in five years, jobs which never actually appeared.

Their brilliant solution was to eliminate the requirement to hire… mandating they create jobs was inhibiting the states ability fitter away taxpayer loot.

Curt Schilling’s name has been mud in the gaming community since ’93 as a result of him killing Advanced Squad Leader.

He bought it to control it, then did nothing – effectively killing it.

As a former game designer and producer, I have to say this whole thing stinks.

You can produce quality games for 5-10 million each with teams of 30 or so people per product (MMORPG’s have bigger staff, but then they have a monthly revenue base from their players). I’ve personally produced games that sold over 250k units for under $500k with a team of only a dozen.

Also, gaming is a HUGE market, comparable in many respects to the film industry. There’s no shortage of private capital willing, indeed eager to invest.

Schilling is PERSONALLY wealthy enough to finance multiple successful product lines, if he had the slightest idea what he was doing.

Ace’s analysis is dead on, in every respect.

“450 people? To design a video game? I worked in the industry about 10 years ago…”

Please tell this dummy that a console or PC game designed 10 years ago are pale shadows of video games designed today, let alone an MMO (which the loan was to pay for). It cost between $150-200 million to develop the recently released “Star Wars: The Old Republic” MMO.

Uncle Samuel | May 18, 2012 at 6:32 am

How many other Blue/Democrat States have invested (aka laundered) huge amounts of public funds in short term/high expense crony greasing ventures?

    Uncle Samuel in reply to Uncle Samuel. | May 18, 2012 at 6:33 am

    Make that crony political machine greasing ventures.

      Uncle Samuel in reply to Uncle Samuel. | May 18, 2012 at 6:37 am

      FOLLOW THE MONEY and maybe we can rid ourselves of these parasites for good.

      Next question – are the Republicans playing the same games?

      Mitt Romney certainly did in Massachusetts and elsewhere.

      Drain the DC Jacuzzi aka Cesspool.

      It’s time to end the permanent political class.

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