Dennis and Callahan Continue Laughable, Blind Defense of Curt Schilling

23 thoughts on “Dennis and Callahan Continue Laughable, Blind Defense of Curt Schilling”

1. Great point on Minihane Bruce.

   I’m not his biggest fan generally, but he refused to be bullied by Gerry and I also noticed that when he asked a question that D&C didn’t want to answer, Dino piped in with, “let’s move along.”

   Minihane’s is a stark contrast to Mut.  Everyone in the media that he sees, hears or reads does “a great job”, other than the other radio station in town of course.

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2. In the second least shocking event, Toucher and Rich spent the better part of the morning not understanding how high finance works in their scathing ridicule of the 38 Studios layoffs and impending bankruptcy.  As a RI resident I was against the loan guarantees when they happened, and as much as I hate Lincoln Chaffee, at least he did not let the state pour good money after bad and give the tax credits.

   Having said that T&R wanted to know how the Schilling got the $75 mill guarantees in the first place.  After all he has no business experience, no track record in the video game market and he appears to be a lousy manager.  They also asked if a non famous person had gone to the state with the same deal Schilling proposed would they have been funded.  My answer to both of those questions is simple.  if the reports are true that Schilling put $30+ mill of his own money into the company, then yes I can understand why the RI Economic Development Corporation in conjunction with the State would have supported that venture.  They were presented with a business plan that was asking for approximately a $2 to $1 loan to equity line of credit and the principle owner of the company was using his own money and not just investors money to finance the company.  As much as I thought there was too much exposure to the tax payer I can see how the state bureaucrats could see that a loan guarantee, not a straight loan, over 5 years to a seemingly well funded company, bringing 400 jobs to the state and who was pretty close to releasing their first game, looked like a good investment.  

   T&R want it to sound like Schilling was a fool for investing his money and that RI was duped.  The second part may be true when the books are opened and we see where the money was spent.  But Schilling believed in the product and the idea, put his money where his mouth was and tried to create a new business.  He should not be ridiculed for that.  He should be lauded for it…but they can’t because they think he is a pompous ass whose politics they disagree with. 

   One note…I don’t think either station is doing a decent job covering this story.  None have the personnel to understand and explain the complexities of the finance.  The discussion has been reduced to simplistic “slams” or “props” with neither side really looking fairly at the deal, the outcome and the people effected.

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   1. Schilling is hypocrite and  a scam artist.  “Lauded”, what a joke.  States shouldn’t be investing 75 million in a video game company that was a 50 to 1 shot  when infrastructure is crumbling. You expect a sports radio station to “cover” a subject that has subtlety? Get real.

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      1. I don’t think he is a scam artist. I readily concede he is a hypocrit as he should not have asked for or taken government assistance. But if he truly put in the $30 mill of his own money…where is the scam. He stands to lose a heck of a lot of money.
         I expect someone to know what they are talking about before making simplistic accusations as T& R did. I suggest that they did not and do not understand the situation so the best course of action would have been silence.

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         1. Taking 50 million dollars in taxpayers money to produce a video game (think about that for a minute) and not being able to make your loan payment and then folding the company with no warning to employees makes you a scam artist by any sane definition of the word.  

            And then there is the recent news underscoring Schilling is in fact a scam artist. Not paying employees, canceling their health insurance with no forewarning, telling them you’ve paid for the sale of their houses when no sale has been made.  When they open up the books expect more evidence of his duplicity to be exposed.
            It’s laughable that the defense of Schilling amounts to an attack on someone else’s intelligence and their inability to understand the complex nature of big business.  Of course none of this is Schilling’s fault, it’s someone else’s.  He’s such a believer in personal responsibility.  

            Schiling is a fraud, a crybaby, a welfare queen, the least of his problems is being a hypocrite, who isn’t a hypocrite on some level.  

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            1. He put up $50 mill of his own money. Where is the scam? RI came to him and asked him to move with the promise of loan guarantees and tax breaks. Where is the scam? Was their bad communication about the state of the company’s finances…sure. But again, how was Schilling enriching himself at other’s expense which is the definition of scam? The guy stands to lose $50 mill, if that is not taking personal responsibility…I don’t know what is.

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3. Dennis and Callahan are laughable buffoons, and I couldn’t give less of a rat’s ass about what they think about anything.

   What irks me a tiny bit here (emphasis on tiny) is that the Schilling thing is being blown up into something that it’s really not. There’s absolutely an element of hypocracy for Schilling to be taking advantage of government money while railing against government spending…. but some people are twisting the facts specifically to increase the apparent hypocracy.  

   Three things…..

   (1) The $4m that Minihane pulls out yet again has been repeatedly incorrectly reported.  As it turns out, it was a third-party bridge loan (technically a line of credit) that the COMPANY took out prior to the RI loan disbursement, one that was personally guaranteed by Schilling.  (That’s not surprising, as the company was shaky financially at the time, and a lender would require someone with sufficient capital as a guarantor.)  Bridge loans are routine in corporate financing situations, there’s nothing unusual about that.  And it was not SCHILLING that was repaid the $4m out of the RI proceeds.  It was the third-party creditor.  It’s only a benefit to Schilling in that it releases him from his obligation to pay the $4m himself if the company defaulted.  But Schilling didn’t “get $4m” from RI as Minihane wants you to believe.

   (2) What really bothers me is how people are mischaracterizing the Rhode Island program and what it was meant to do.  If you read the reporting surrounding 38 Studios in the past couple of weeks, you’d think that Rhode Island had set up this special fund to help Rhode Island companies succeed, and that Mean Curt Schilling came and stole $75m of corporate welfare from the other poor struggling Rhode Island businesses who needed it more.  

   That’s complete and utter bullshit.

   The program was set up — and I can’t emphasize this enough — specifically to steal software businesses away from Massachusetts.  Greater Boston has a thriving software development community, and RI wanted a slice of that.  (It’s great for tax revenue, as the jobs tend to be high-salaried and therefore high-tax-generating positions.)  So they set up a “development” fund that would loan money at very generous rates to businesses willing to relocate to greater Providence.  They bribed companies to move to Rhode Island.  That’s it, in a nutshell.  And you know what?  Every state does this.  Schilling didn’t really “take” anything.  He was GIVEN a sweetheart loan deal in exchange for moving the company.    There’s a profound difference between a company coming to a state and saying “we need money or we’ll leave the state” (that’s “corporate welfare”) and a STATE coming to a COMPANY and saying “come to our state and we’ll give you money”.  The former is trying to get the state to bail out your bad business.  Refusing the latter (if it makes business sense) would be clinically insane, and grounds for removal from your position at the company.  

   The real issues at play here don’t really have anything to do with 38 Studios.  It’s “why is Rhode Island doing this” and, more importantly, “is this a good use of taxpayer funds”.  There’s certainly hypocracy at work here if Schilling thinks the answer to that second question is “yes”.  But hypocracy because he took a governmental bribe?  Not necessarily.  His duty is to do the best thing for his business, and there’s no question at all that a sweetheart loan deal was better than any alternatives presented at that time.

   (3) Finally, Schilling isn’t necessarily a bad businessman.  Like I’ve said in the past, I’ve been following the company f/k/a Green Monster Games since it was formed, because of the Schilling connection and because I have a lot of knowledge about the video game industry.  His business plan actually wasn’t terrible, given that he was putting up copious amounts of capital himself.  But it was highly speculative — and I question whether he ever truly realized how speculative it was.  To repeat something I said on another site, an MMO is like an oil rig:  it requires an enormous up-front capital investment, and isn’t guaranteed to produce any revenue, let alone a reasonable return.  But there’s a non-trivial chance that it can produce enormous, enormous returns for you.  That’s pretty much the definition of a speculative investment.

   The original 38 Studios business plan seems to have been fine — Schilling capitalized the company heavily with his own money, and didn’t appear to have overstaffed the company such that its burn rate was unsustainable over the planned development time of the product.  The acquisition of Big Huge Games, which was the big curveball, was eminently sensible, too.  By acquiring it, 38 got (a) pre-existing IP and technology, plus the staff to develop it, and more importantly (b) a product in the pipeline (the game that became Kingdoms of Amalur: Reckoning) that was reasonably close to release.  Bringing on that many new employees would dramatically increase the burn rate, but would also speed development on the MMO and provide a cash generator in the interim.  That made a ton of sense.  

   Here’s the problem:  good business plans can still fail due to circumstances.  And MMO development is fraught with circumstances.  You can be merrily developing along, doing great work, when some competitor suddenly releases a game with Bell & Whistle #23 as one of its mechanics.  If the public likes B&W #23…. then your game is going to have to also have B&W #23, or preferably something better.  So you have to (a) develop B&W #23, (b) find a way to work it into your existing engine/assets, (c) debug the resulting mess, and (d) get back on track for development.  And then someone else comes out with Bell & Whistle #40.  Rinse, lather, repeat.  There’s a very good reason why MMO development is traditionally done by companies with massive resources behind them — you literally cannot throw too many people at the problem, and delays and setbacks are inevitable.  If you don’t have a cushion of cash flow to sustain that, you’re asking for trouble.  That was Schilling’s problem — I don’t think he anticipated that adding the Big Huge Games staff to developing Copernicus might not speed along the release of the game, i.e. that he might be increasing the burn rate unsustainably.  Which, with 20/20 hindsight, is exactly what happened.  The further out the Copernicus release date went, the more KOA:R was relied upon to fill in the cash gap, to the point where realistic sales goals weren’t going to cut the mustard.  

   The plan, though, wasn’t really the problem.  Had things gone more smoothly, or had KOA:R sold like hotcakes, we wouldn’t be having this discussion now.  The problem was that 38 Studios was walking a tightrope financally, and it lost its balance.  Which happens all the time in business — just usually not with a former Red Sox pitcher involved.

   tl;dr summary:  everyone’s missing the point.

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   1. I highly doubt Callahan would speak like that to somebody face to face.

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   2.  On your second point, I have read that the loan guarantee fund was increased after Schilling came along.  In that way the state did act specifically to attract 38 Studios.  Also, I have never read that the fund was specifically for software development and have frequently read that the fund was to be broadly used, but 38 Studios sucked up the majority of it.

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      1. http://www.wpri.com/dpp/news/schilling-loan-ok%E2%80%99d-without-final-rules
         “The law, which was strongly backed by Stokes, stipulates that guarantees should go to companies focused on “the sciences, technology, digital media, innovative manufacturing and other technologies.” Legislators also said the program should give priority to firms that would create high-wage jobs quickly.”

         The Job Creation Guaranty Act was created specifically to fund companies that were involved in intellectual property businesses.  There was already a entity in place for tangible property companies, the Industrial Recreational Building Authority, that funded businesses who wanted to put plant and equipment in RI.  But there was no state incentive program to attract/help businesses that dealt with intangible assets; i.e. software and “knowledge” companies.  This program was specifically for them.  

         This bill was debated and passed just about two years ago.  At the time, Massachusetts was being lauded for its rapid recovery from the 2008-9 recession, driven mainly by…. you guessed it….. software companies, such as Phase Forward (eventually purchased by Oracle), and Turbine, the developer of Asheron’s Call and Lord of the Rings Online.  RI wanted in on that.

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         1.  That article supports the conclusion that the state acted specifically for 38 Studios.  As I stated above, the fund was increased after Schilling expressed interest and the use of 60% of the fund was done before the RIEDC had any rules or guidelines in place.

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            1. Oh, there’s no question the state changed the rules to specifically benefit 38 Studios.  I’m just saying they’re precisely the kind of fish the program was designed to land.

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            2.  But your conclusion that Schilling didn’t take money meant for others isn’t so certain if the fund was expanded for him and there was no rules or limits on what companies would get guarantees  and how much of the fund would go to a single company.  

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   3. Dave:

      Great analysis.  One quasi knit pick.  The RIEDC which ended up being the agency that funded 38 Studios had a different mission before the 38 studios deal.  It was set up to lend $3 -$5 mill to companies that wanted to expand within RI.  The legislation you point out later basically forced them to change their MO and do the 38 Studios deal.  As a RI resident one of my main concerns all along about the deal was that RIEDC was ill equipped to understand and monitor the finance it was supplying.  

      Of course all of this might be moot.  The $64K question seems to be how did 38 Studios burn through all cash in 6 weeks without any red flags going up.  I know the CEO was on maternity leave but something does not add up.  One would think Schilling with his $30 mill on the line would be looking at the books and cash flow on a daily basis.  If you read between the lines on everything being reported you almost think 38 studios thought they were to big to be allowed to fail.  I just don’t understand where the money went…especially considering they sold 1.2 mill copies of reckoning in 3 months.

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4. Wow, I can’t really add much on this. DaveR/LTD offer some of the best commentary I’ve read on this.

   What I’m wondering is how long/much this is going to be covered “improperly”. LTD covers this well with T+R, and I suspect Felger is going to go nuts on this again, today. Unfortunately, it seems like this will be your usual “tribal” issue with the dichotomy between sides formed along purely political lines.

   DaveR points out why any CEO would take advantage of this, even if it means getting funding for a state. I suspect this is going to be investigated for some type of corruption/kickbacks, but it seems like that’s how life works.

   On DaveR’s points for “Defending” him, how many times could we go back and find D+C trashing Solyndra for the very same reason?

   ltd sums it up best, “I don’t think either station is doing a decent job covering this story.
    None have the personnel to understand and explain the complexities of
   the finance.”

   Couldn’t agree more. It goes back to the “leave this to the political folks” point that Bruce made.

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5. I’m glad you brought this up Bruce. I only heard D&C for 5-10 minutes driving into work but caught enough of a whiff to retreat in disgust. Another Gerry-ism is when he makes the high-pitched whiny Boston voice (different tone than Mazz’s Boston guy impression) “but what about the children…” and “don’t you care about the workers that lost their jobs” statments, seemingly mocking anyone for sympathizing with those who are actually affected by losing their jobs. I don’t say this often, but I really wish ill-things towards Gerry Callahan. It’s times like this that I hope he would lose his job, be unable to find work, thus finding himself in the same predictament. I despise him as a human being, though I doubt he is actually human, has a soul, or conscience.

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   1. That’s a little more positive than my viewpoint on him.  But so be it.

      Fear not, some day Gerry will be obnoxious and condescending to the wrong guy at the wrong time, and he’ll learn that how much money you make does not have much bearing when someone’s bashing your face in with a baseball bat.

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      1. I wondered the same about Felger, sadly.

         There is commentary and then there is that stuff where it goes overboard.

         The latest thing with Felger going the victory lap, for Mazz, after Ortiz was pissed at “the media member” on the story about his leadership (I think it was this).

         That’s Skip Bayless territory.

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6. So those two embittered, bigoted old coots are still on the radio. Thanks for the update 😉

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7. Another real sports question on this:

   Has anyone seen Schilling on ESPN? I haven’t seen him in a month. He isn’t one of their primary BBTN analysts but I recall his regular days were Sunday/Monday.

   I’ve not seen him on since this stuff broke 2 weeks ago.

   ESPN, like Schilling, is also not talking much on this:

   http://espn.go.com/boston/conversations/_/id/7972909/rhode-island-governor-says-curt-schilling-company-again-violation

   Basically, they just used their wire license there to copy the article, with 0 commentary (not that there is anything for a sports reporter to comment on).

   I wouldn’t be surprised if ESPN wants to keep him off while all of this stuff is going on, so they don’t have to answer questions themselves. At the same time, his ESPN gig had nothing to do with all of this and he’s not in trouble with the law. ESPN has kept many of their folks (Jalen Rose, Matt Barneby, etc) on while they were “pending” things going on.

    

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8. Last thought on this: I found it funny that “both sides” (this, like every other political issue, has been divided among political lines) are actually talking about the same thing. Even with how analogous it is, the current climate doesn’t seem like it would ever bring the sides together.

   Also, awesome win last night. I loved Rondo gutting it out. I forget who was calling on ESPN but they seemed to bring the better crew there who calls the game, instead of sounding like they’re a hometown call for a specific team. However, I was mainly focused on the USMNT 5-1 win, so I didn’t catch it all.

   Unfortunately, cue the LeBron love affair right after. I’m not sure how much of a chance we have but Screamin’ A Smith has, like Chris Broussard, become one of the LeBron camp mouthpieces as his role on First Take increased.

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9. I raked Minihane for his idiotic attack of Jack Edwards but I applaud him for this piece. Curt Schilling is a pompous piece of $#!t.

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10. Yeah, Schilling is not a scam artist.

    http://www.boston.com/business/technology/articles/2012/05/31/game_makers_ex_staff_seek_pay/?p1=News_links

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