Caprio reverses course, asks bond raters to put brakes on EDC-38 Studios deal

R.I. GENERAL TREASURER Frank T. Caprio asked the major bond ratings agencies to hold off on evaluating the 38 Studios project until a new governor is elected, reversing his earlier support of the deal the company made with the R.I. Economic Development Corporation. /
R.I. GENERAL TREASURER Frank T. Caprio asked the major bond ratings agencies to hold off on evaluating the 38 Studios project until a new governor is elected, reversing his earlier support of the deal the company made with the R.I. Economic Development Corporation. /
(Updated, 5:15 p.m.) PROVIDENCE – R.I. General Treasurer Frank T. Caprio said Tuesday he is attempting to block the state’s $75 million loan guarantee promised to Curt Schilling’s video game company, urging the rating agencies reviewing the deal to hold off until a new administration is in office. Caprio, the Democratic gubernatorial candidate, said he…
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5 COMMENTS

  1. Here is a guy who knows absolutely zero about the video game industry, the key players or, apparently the financial structure of these types of deals and now he decides it’s not a good “eye-dear” (idea).

    Hey Frankie, allow Joey Bag o’Donuts to break it down for you:

    1. You give 38 Studios $75MM to relocate to RI.
    2. Press release, rah rah, hiring, jobs, money, ground breaking ceremony, news articles, photo ops etc., nightly updates on the progress, ribbon cutting ceremony, talk of the town, everybody’s thrilled with the deal. Every politician from here to Miami claims credit.
    3. Game development goes well for 38 Studios, looks to be a potential hit. Disney/Sony/MSFT/Apple/Playdom/etc. decide to buy 38 Studios for $100MM
    4. 38 Studios terminates all operations in RI as acquiring company relocates game design and development staff to corporate HQ or regional branches in NYC and LA.
    All marketing, operations, finance and support employees are fired.
    5. Acquiring corporation gives buffoons in RI their $75MM back.

    The bad news? That is the best case scenario and it will take less than 18 months – MAX – to play out.

    What’s worse? Rhode Islanders are getting ready to elect this clown to a political office where he can further drive the state into a deeper hole.

  2. Ken is most likely going to be right in his prediction of events. However, I’d like to suggest another similar outcome – Hasboro could buy 38 Studios and we could hope to keep some of those jobs in a ‘staff consolidation’ measures. if that’s the case, this loan is a low risk process for Hasboro to kick the tires and watch a department start up, isn’t it?

  3. Caprio is absolutely correct in identifying the terms of the loan that are not commonplace to small business deals.

    No small business in RI can get a term loan from a bank OR EDC without a personal guarantee from the owners. Yet, Schilling, a multimillionaire, get’s $75 million without a personal guarantee? Why doesn’t EDC demand that Schilling get some of his own skin in the game?

    Good for Caprio to show the fortitude to get up and tell the people this is a VERY BAD deal.