I’m a Red Sox fan, unabashed and proud. I wept when Pedro lost Game 7 of the 2003 ALCS to the dreaded Yankees. I was overcome with joy when the Sox came back from a 0-3 deficit to beat those same dreaded Yankees in the 2004 ALCS.
Central to the winning of a World Championship in 2004 was Curt Schilling. There he was, helping to rid Red Sox Nation of the 84-year curse of the Bambino. There he was, on the mound in Game 6 of the 2004 ALCS, pitching seven innings with what became his iconic bloody sock. He led the Sox in 2004 and was a key to their second World Series triumph in 2007.
After that, it started to go bad. After signing a one-year contract with the Sox in 2008, he was out for the year due to a shoulder injury. The one-year deal was for $8 million in base salary, plus incentives. He never earned the extra money that year, but no doubt took the $8 million. After all, he did sign the contract and no doubt would have sued the Sox right down to their Green Monster to collect if they welched. A contract is a contract.
In 2009, Schilling retired. With all his fame and fortune, a baseball god in New England, he could have done anything. He could have opened a bar similar to the fictional Sam “Mayday” Malone of “Cheers” fame. He could have bought a winery like Drew Bledsoe, whose house Schilling bought in 2004. He could have become a baseball analyst like former Sox manager Tito Francona.
Instead, he started a video gaming company and named it 38 Studios.
During his playing years and after, Schilling has been a well-known and vocal Republican. He supported President Bush’s re-election effort in 2004 and John McCain’s presidential run in 2008. He stumped for Scott Brown in his Senate campaign in 2009. He’s also what we could call a “small government” conservative, meaning that the government should stay out of the economy.
Unless, of course, the government is willing to invest big money in a video gaming company with no track record and no product. But where could such a government be? Who could be dumb enough to drop multi-millions of dollars in the coffers of an untried and untested company, in a volatile industry, with no product?
Curt, welcome to Rhode Island.
We all know the story. We know how Curt charmed the spikes off the former high school jock, Don Carcieri, another vocal small government conservative. Their chemistry must have been so powerful that it made them forget their political and economic principles.
But the charm offensive didn’t end with Carcieri. Curt wowed the Economic Development Corporation. He captivated the General Assembly. He molded public opinion. And in the end, he walked away with $75 million in loan guarantees. And as we also know, he defaulted earlier this month and is now effectively out of business.
What does that mean to the Rhode Island taxpayer? About $102 million if we have to pick up the pieces of this absolutely stupid venture. Let’s see how the math works out. Schilling got $75 million in loan guarantees from the EDC, with $52 million paid out to 38 Studios. The EDC got its money from the sale of bonds. Schilling is supposed to make regular payments to the EDC to pay off the bonds. If Schilling’s company defaults, the taxpayers are on the hook for the amount borrowed, plus interest.
There must have been some collateral put up against the loan, right? Of course there was – the company’s game software. What’s the value of that? Somewhere around $20 million. What a deal!
Now in case you think I’m piling on with 20-20 hindsight, I’d like to remind you that I called this deal “stupid” in 2010. Hey, I’m a big Sox fan. I reveled in the glory of the bloody sock. I even have my picture next to the display of the sock in Cooperstown. If anyone was to be blinded by the glitz and the glory of Curt Schilling, it was I. And even I could see through this charade of economic development.
I think I wrote at the time that if Curt were named Schoos instead of Schilling, he’d have been shown the door. As well he should have been, irrespective of his name or past affiliations.
And now comes the finger pointing. We’ve already lost two members of the board of the EDC, with others not seeking reappointment. Given their track records, I think theirs is now a wise decision.
But there are other, more pressing concerns. First, what has become clear is that the communication between the state and 38 Studios was virtually non-existent. So we have no idea where the money is, what the company’s financial situation is, how many games were sold, and what the state’s ultimate exposure is to the bondholders. All will be revealed over time.
However, there is a greater concern going forward, and that is Rhode Island’s approach to economic development. We seem to be looking for the “next big thing” on which to tie our economic development hopes. Rhode Island is pushing its “knowledge/innovation based” economy, the high tech industries of the future. Many of these firms are being incubated in the former jewelry center in Providence.
We are working to attract biotech industries. This makes sense, as these industries often attract other ancillary industries, thus expanding the impact of the state’s investment. This is a good thing, but it’s not enough.
Any economic development program must promote diverse enterprises, big and small. We need to include all Rhode Islanders into the mix, not just those who are able to participate in the new knowledge-based industries. Therefore, we need to devote economic development dollars not just to attracting out-of-state businesses, but also to develop new businesses and support those already existing.
In short, what we need is a comprehensive economic development policy, one that is well thought out, one that is integrated with other state goals, and one that takes into account the challenges of including everyone into the process, including those currently economically marginalized.
People without skills and appropriate educational levels will never be able to compete for jobs in the new economy. If Rhode Island is serious about economic development, it will need to get serious about developing and funding workforce training and educational programs to meet the needs of those living in distressed neighborhoods.
Education needs to be redefined. While as a former teacher I can relate to and often applaud most of the education reform agenda, these reforms are targeted to the current and future school-aged kids. These proposals do nothing for the 20-year-old high school dropout who, now that s/he’s more mature and wizened, seeks to join the workforce in a meaningful way. We need programs to address these concerns.
We need to invest in small businesses by providing the capital, and the business and legal supports that are necessary for success. We need to invest in those businesses here in Rhode Island that are struggling to make payroll, avoid layoffs, and closing the doors for good.
In short, we need to invest in ourselves. We need a diverse economy so that we are not shocked for generations by its folding as we were with the textile, jewelry and defense industries. By investing in ourselves, we have the opportunity to directly reap the benefits of our investments. By investing in ourselves, we can control our fates. By investing in ourselves, we can demand greater accountability.
To do so will take greater planning and management than we’ve seen recently with 38 Studios. It will take time and patience to see the results of these investments, perhaps generations. It will take political courage not just to promote and advocate these investments, but the courage to risk political defeat.
Finally, it will take real leadership to collaborate and cooperate with all the public and private stakeholders involved in this effort. It will require the breaking down of the silos so extant in Rhode Island. It will take the leadership to break the mold of doing things a certain way because they’ve always been done so. It will take the kind of resolute vision to reform our state.
It will take the leadership and vision that were non-existent in the 38 Studios debacle.