Curt Schilling, Rhode Island and the Fall of 38 Studios

You have to imagine what it was like being Don Carcieri in the harsh winter of 2010. As Rhode Island’s governor, a Republican in an overwhelmingly Democratic state, he had come into office seven years earlier as a business executive turned politician, vowing to retool the state’s corroded economy.

But that winter, Rhode Island was on the precipice of economic ruin. Its unemployment rate was pushing up against 12 percent — fourth worst in the nation — and three of its cities were careening toward bankruptcy. Facing term limits, Mr. Carcieri had only months left to do something to arrest the steep decline.

And that’s when Don Carcieri ran into Curt Schilling, the revered former Boston Red Sox ace — the man who had famously bled through a sock while pitching his team to its first World Series title in 86 years. That March, Mr. Carcieri attended a fund-raiser for a prospective documentary at Mr. Schilling’s 25-acre estate in Medfield, Mass. The two men exchanged pleasantries in the living room before the talk turned abruptly to business.

“I said, ‘Well, what are you doing?’ ” Mr. Carcieri recalled when I met him recently, at a Panera Bread in East Greenwich, R.I., his hometown. “And he said, ‘I’ve got this business, this company, creating video games.’ Which I knew nothing about — my grandkids know more about it than I do. But he was describing it. He said: ‘It’s a great little company, it’s growing,’ et cetera. And he was looking to grow it further.”

More to the point, Mr. Schilling let drop that he wasn’t getting much help in Massachusetts when it came to the financing he needed to expand, and he was frustrated. You can imagine the heralding trumpets that must have been blasting in Mr. Carcieri’s ears as he listened to Mr. Schilling dangle hundreds of jobs in front of him.

Curt Schilling, center, at an animation team meeting at 38 Studios, his game company, in early 2012. A few months later, 38 Studios sought bankruptcy.

Within a few weeks, Mr. Schilling, a novice in the gaming field, was wowing other local politicians with his outsize presence and his grand ambitions to build a Microsoft-like behemoth. And soon Rhode Island’s lawmakers were rushing to approve a deal to make the state Mr. Schilling’s angel investor. The tiny, struggling state issued $75 million in bonds so that Mr. Schilling’s company, called 38 Studios, could relocate to Providence and unleash the world’s next killer fantasy game.

Ideas that seem plausible in our darkest moments often seem plainly flawed in hindsight, and you can probably see where all this is going. A little more than two years after Mr. Carcieri first talked to Mr. Schilling about 38 Studios — so named for his baseball uniform number — the company went bankrupt, blowing a sizable hole in the state’s already strained finances. And now Mr. Schilling’s headquarters on Empire Street, the brick building just a few blocks from the Capitol that was supposed to prompt a high-tech urban renaissance, sits locked and abandoned, like some ugly monument to political folly.

Gov. Lincoln Chafee has called the state’s backing of the company “the worst investment that’s ever been made, I think, in the history of Rhode Island.”

Politicians are debating whether Rhode Island can afford to repay the bondholders, or whether it should simply default. Because the bonds are what’s known as moral obligation bonds, the state doesn’t technically have to repay them, but its credit rating could take a hit, and Mr. Carcieri’s successor as governor, Lincoln D. Chafee, has promised that the bondholders would be repaid. Mr. Chafee is also suing Mr. Schilling and his partners, along with a raft of former state officials, banks and law firms involved in the deal, and a criminal investigation is under way.

Even in a state that long served as New England’s Mafia headquarters — and a state whose best-known modern political figure, Buddy Cianci, the former Providence mayor, was sent to prison in a federal corruption case known as Operation Plunder Dome — the 38 Studios debacle has registered as a painful embarrassment. (When I called influential Rhode Islanders and told them I was writing about 38 Studios, virtually all of them, even if they had opposed the deal, answered with some version of, “Do you have to?”)

Rhode Islanders are used to being played by their politicians. What makes them cringe is the suspicion that virtually all their elected leaders might have been played by someone else.

A Beguiling Vision