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38 Studios Skips Payroll in Favor of Paying Back State [UPDATED]

Workers go unpaid as the studio works to make its owed $1.125 million payment to the state of Rhode Island.

38 Studios head Curt Schilling being accosted by reporters following yesterday's meeting with the Rhode Island EDC.
38 Studios head Curt Schilling being accosted by reporters following yesterday's meeting with the Rhode Island EDC.

Coming on the heels of yesterday's circus-like meeting and press conference regarding the developing situation at 38 Studios, WPRI is reporting that the company is in the process of paying its overdue $1.125 million payment to the Rhode Island Economic Development Corporation, but is doing so at the expense of its own employees.

Current reports state that 38 skipped payroll this week, leaving the more than 300 full-time employees at the company without a paycheck. In addition, a source has told Joystiq that all temp and contract employees had been let go as of this week.

In the wake of the situation at 38, Keith Stokes, the executive director of the RIEDC since 2010 and architect behind the $75 million loan that brought the studio to the state from Massachusetts, has resigned.

38 Studios still has yet to comment publicly on the situation.

UPDATE: Just when you thought this whole thing couldn't get any worse, WPRI now reports that the check 38 Studios reps hand-delivered to the RIEDC has been returned due to insufficient funds.

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267 CommentsRefresh
Avatar image for sarx
Posted By Sarx

I feel for the employees. The management however has only itself to blame.

Avatar image for captainanderson
Posted By captainanderson

This why most video game companies aren't run by retired baseball stars.

Avatar image for sammo21
Posted By sammo21

The only way to describe this is shitty.  Hopefully somehow things turn around.

Online
Avatar image for thepilgrums
Posted By ThePilgrums

@RadixNegative2 said:

Why do I find this hilarious?

Because you're an asshole?

Avatar image for oturista
Posted By oturista

This bums me out to no end... I thought the game had sold well, it's so good.

Avatar image for oldirtybearon
Posted By Oldirtybearon

There was almost no marketing for Reckoning, and regardless of what you think on its quality, it was an RPG that had the perfect slot in between two behemoths in the genre. It should have sold better than it did, but the lack of marketing (and lack of bells and whistles that's commonly expected in a modern RPG, such as an engaging story or memorable characters or a well-realized world) really did a number on things. Sucks that nobody is getting paid because one title sank an entire studio, but that's the reality of the world we live in. Simply wishing to make a great game won't make it so.

Avatar image for pxabstraction
Posted By PXAbstraction

As of just moments ago, Curt Schilling has been removed from the 38 Studios web site. Oh boy.

Avatar image for narcolepticbat
Posted By NarcolepticBat

I am Rhode Island born and Rhode Island bred and when I die I'll be Rhode Island dead.

Avatar image for redroach
Posted By RedRoach

@oturista said:

This bums me out to no end... I thought the game had sold well, it's so good.

It sold pretty well for a new IP, and one without marketing at that. But 38 has 300 hundred people, average studios have around 100. That, plus they've been funding an MMO for years now as well as paying off a 75 million dollar loan. Even if Reckoning was a smash hit, 38 would still end up here because of poor management.

Avatar image for ehker
Posted By Ehker

@PXAbstraction said:

As of just moments ago, Curt Schilling has been removed from the 38 Studios web site. Oh boy.

Yup, I noticed and posted that earlier. Management disappearing from the website, along with the CEO and COO are now gone.

Avatar image for akumous
Posted By akumous

Tmobile is restructuring and therefore thousands of jobs would be affected; HP is also restructuring, up to 30,000 jobs will be cut. And now this...these CEOs should be affected and there salaries be cut to 80% since they are making ridiculous amount of cash. Any CEO that compromises their work team is incompetent in my book.

Avatar image for ethanielrain
Edited By EthanielRain

Maybe it's just been a long time since I've seen him...but man, Curt Schilling looks haggard. Dude looks like he hasn't slept well in a month. I highly doubt he's "laughing all the way to the bank" while screwing the working stiffs, as some here have suggested.

Avatar image for pxabstraction
Posted By PXAbstraction

@Ehker said:

@PXAbstraction said:

As of just moments ago, Curt Schilling has been removed from the 38 Studios web site. Oh boy.

Yup, I noticed and posted that earlier. Management disappearing from the website, along with the CEO and COO are now gone.

Ahh sorry, didn't see your post. So the CEO and COO are gone too? Wow.

Avatar image for aleryn
Posted By Aleryn

They have my sympathy, but I can't help but see this as further proof of the traditional triple-A budget being unsustainable. Maybe even double-A.

Avatar image for the_nubster
Posted By The_Nubster

Oh man, this is awful to hear, and that update is almost cringe-worthy. Good luck to everyone over there.

Avatar image for ehker
Edited By Ehker

@PXAbstraction said:

@Ehker said:

@PXAbstraction said:

As of just moments ago, Curt Schilling has been removed from the 38 Studios web site. Oh boy.

Yup, I noticed and posted that earlier. Management disappearing from the website, along with the CEO and COO are now gone.

Ahh sorry, didn't see your post. So the CEO and COO are gone too? Wow.

Jennifer MacLean, and Bill Thomas. They had a couple lame excuses for the CEO Jennifer going missing from work, first no clear answer followed by a maternity leave excuse.

This is the google cache of the original management page. http://webcache.googleusercontent.com/search?q=cache:cJf36YkK9vIJ:38studios.com/people/management+&cd=1&hl=en&ct=clnk&gl=us

Avatar image for viking_funeral
Posted By viking_funeral

@DrRandle said:

I'm curious what EA's input on this one since they were publishing. Were they just contracted to move the game around, or is there anything they can do to help get this set straight? Not that they likely wood, I'm just more curious than anything.

EA has nothing to do with this. KoA - Reckoning was published through a EA Partners deal. Basically, EA paid for the distribution and advertising of the game, and probably took the standard 30% publisher's fee. Developers usually only get 15-20% of the revenue, but those are being grouped together more and more these days as publishers just buy up developers. This was not one of those cases, so EA has no financial obligation to pay any of 38 Studios' debt.

Not to mention that this $75m was for the MMO that still doesn't have the name. KoA - Reckoning was a separate venture, as I understand it.

Avatar image for corvak
Posted By Corvak

@SmasheControllers: I would expect its royalty based, so they'd get a cut based on whatever their arrangement with EA is.

I believe they get 100% of Steam revenue, minus Valve's cut as retailer, for example. EA is only publishing retail and console versions.

These bungling executives are lucky they've got a good team working there, honestly.

Avatar image for razkazz
Posted By razkazz

This is all Todd McFarlane's fault.

Avatar image for krummey
Posted By Krummey
@Epsilon82

Wow...this is the worst possible thing to happen. Especially with no light at the end of the tunnel. What are they thinking, that they're going to just not pay people every month?

So the state gets theirs, Schilling gets his, and the rank and file who actually do the work get nothing. Sounds like 21st Century America in a nutshell.

Occupy Rhode Island!
Avatar image for penguindust
Edited By PenguinDust

Show 'em the sock, Curt! Show' em the sock.

(I bet he took all the money and is now on some tropical South American beach.)

Avatar image for warmonked
Posted By warmonked

"...leaving the more than 300 full-time employees at the company..."

Ok, that would explain how they burned through $75 million in a few years.

Avatar image for volgin13
Posted By Volgin13

@MovieFlask said:

Curt could use a few more shillings.

Avatar image for bigbosscb
Posted By BigBossCB

That sucks, too bad the whole company has been so badly mismanaged.

Avatar image for briansanderson
Posted By briansanderson

What were they doing employing over 300 people with only having released 1 game fo far. Ya they have not managed this company well at all. A shame. I kinda liked Amalur too.

Avatar image for radioactivez0r
Posted By radioactivez0r

Seems kinda bullshit for the employees; the studio and the state negotiate the loan, they just come to work there, but they're the ones who get shafted when the studio fucks up. "Sorry guys, we know you've been working hard and all, but...we have to cut back on the free coffee. (Also we can't pay you). Happy Friday!"

Avatar image for depecheload
Posted By depecheload

@razkazz said:

This is all Todd McFarlane's fault.

Most things are.

Avatar image for pxabstraction
Edited By PXAbstraction

Curt Schilling the massive capitalist two-face.

The most frustrating part about this is that while his employees probably lose their jobs, he's got enough money personally that he'll escape from this unscathed. The saddest part is that Kingdoms of Amalur likely did very well when you take into account international and digital sales beyond the useless NPD numbers. Everyone's fleeing AAA console development right now but that's the one thing that did well for them. If they'd stuck to that instead of burning all their reserves on Yet Another Fantasy MMO, they'd probably be doing alright.

Avatar image for nickux
Posted By nickux

@Jason_Bourne said:

@oturista said:

This bums me out to no end... I thought the game had sold well, it's so good.

It sold pretty well for a new IP, and one without marketing at that. But 38 has 300 hundred people, average studios have around 100. That, plus they've been funding an MMO for years now as well as paying off a 75 million dollar loan. Even if Reckoning was a smash hit, 38 would still end up here because of poor management.

Also, don't forget that Reckoning was made by Big Huge Games (they were bought by 38 Studios). 38 Studios proper has not shipped anything. Sadly, the studio that actually got a game to retail will go down with the ship.

Avatar image for roujinx
Posted By RoujinX

They should start a kickstarter!

Avatar image for euandewar
Posted By EuanDewar

FAT CATS IN WASHINGTON

Avatar image for stinky
Posted By stinky

@MildMolasses said:

I see a few people blaming the state for this mess, which seems quite harsh. They were given a loan to go to RI to create jobs and tax revenue. I would assume by the size of the loan, that 38 was making some fairly big promises to the government which ultimately they didn't follow through on. I think the problem here is that 38 reached to high and were to mismanaged to do what they needed too. They've been working on that MMO far too long to have not even shown off a screenshot yet

because its too risky, dont use tax payer money on an MMO of all games especially with an unestablished IP.

its an obvious failure on the level of a scam.

Avatar image for familyphotoshoot
Posted By familyphotoshoot

Fuck, I'd hate to see the overdraft fees on a $1.125 million check.

Avatar image for obinice
Posted By obinice

Cheque, not check.

Avatar image for damnboyadvance
Posted By damnboyadvance

Gotta feel for the employees that didn't get their paycheck.

Avatar image for claude
Posted By Claude

You never bet on your favorite team. In Curt Schilling's case, that's MMOs.

Avatar image for thehbk
Edited By TheHBK

Oh no Rich! We do need a good East Coast Correspondent out there, and he is close to the action. Get him signed up CBS!

Avatar image for uberexplodey
Posted By UberExplodey

Someone start a ChipIn for Rich Gallup

Avatar image for spiritof
Posted By Spiritof

Schilling is going to be cutting his ankles and selling commemorative socks before this is all over.

Avatar image for arkasai
Edited By Arkasai

Ouch, what's the fee on bouncing a 1,125,000 dollar check... Also hoping for the best for Rich Gallop, I think he's still working there.

Avatar image for jace
Posted By Jace

@TheHBK said:

Oh no Rich! We do need a good East Coast Correspondent out there, and he is close to the action. Get him signed up CBS!

This.

Avatar image for lilarchie232
Posted By lilarchie232

I don't think kick starter is gonna save this one...

Avatar image for mracoon
Posted By mracoon

Hopefully Rich and all the other employees land on their feet after this whole fiasco. Seems like another case of poor management with the ordinary employees suffering the consequences and the bosses probably getting getting off scot-free. 

Moderator
Avatar image for portis
Posted By Portis

Man, they have (had) 300 employees? Does that include Big Huge Games? This whole thing is getting pretty messed up. Poor Rich.

In there 6 (?) years they did mange to get one game out at least. So that's something at least.

Avatar image for lockwoodx
Posted By lockwoodx

38 studios: "So this is what quicksand feels like".

Avatar image for lokey013
Posted By lokey013

Crap....I better buy Kingdoms of Amalur before they disappear =/

Avatar image for wumbo3000
Posted By wumbo3000

Ah god you hate to see something like this. Hopefully all at 38 Studios goes well. You never want to see game developers go through shit like this.

Avatar image for muthachugga
Posted By muthachugga

@Spiritof: yes bloody socks for everyone

Avatar image for two_socks
Posted By two_socks

Real bummer for those dudes. Hope stuff starts looking up for them soon.

Avatar image for blacklagoon
Posted By BlackLagoon

@fini_fly said:

@PatchMaster said:

@fini_fly said:

I wonder if Curt Schilling could just pay the employees from his baseball earnings.

http://www.baseball-reference.com/players/s/schilcu01.shtml

I'm pretty sure he already put his life savings into the studio . Just another thing that sucks about this situation.

I wonder how much he put into it in all honesty.

Apparently his investment in the studio was $4 million, which he repaid himself with the money from Rhode Island. Looks like he'll get out of this unscathed, while the taxpayers are left holding the bag.