Giant Bomb News


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 theking
Posted By TheKing

I've never liked Curt Schilling for sports and political reasons. But I hope this work out for the sake of the 300+ employees.

Avatar image for meatsim
Posted By MeatSim

This really has gone from bad to worse.

Avatar image for jah_donuts
Posted By JAH_Donuts

Kingdoms of Amalur MMO Kickstarter inbound.

Avatar image for screamingghost
Posted By ScreamingGhost

That's just wrong on so many levels.

Avatar image for megalowho
Posted By megalowho

The check to the state bounced even after skipping on payroll? Ouch.

Avatar image for benderunit22
Posted By benderunit22

300 employees?!?

Avatar image for unclebenny
Posted By UncleBenny

god damn, this is god damn tragic...

Avatar image for radixnegative2
Posted By RadixNegative2

I hope all the employees the best of luck. They made a great game (I thought so anyway) and deserve better than this.

Avatar image for justin258
Posted By Justin258

If I were an employee of 38 studios, I'd be on the hunt for another job. ASAP. Really, I thought that a company not paying their employees was downright illegal under any circumstances?

Avatar image for smilingpig
Posted By SmilingPig

No jokes needed here, its just sad.

Avatar image for skullcrushermountain
Posted By SkullcrusherMountain

@BlackLagoon: @Claude said:

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

But that's unpossible! He's a government-hating, freedom loving libertarian!

Avatar image for shinmaruku
Posted By ShinMaruku

Now while I feel sorry for kers, I thought Curt was self reliance. Ah Hypocrisy. Now really are any of you surprised this happened? This game has been in development for and no hint or hide of the game.ANd it's a MMO in the everquest model. It is not looking good. Now I like reckoning and hope it get's a properer sequel. I say scrap the mmo and make a multiplayer and do multiplayer dlc things. Because the mmo was NOT a good look.Hopefully the staffomething done for thes out. If they got talent they will find a new job.

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Posted By Enigma_2099

All right, who got that money, and which way did they go?

Avatar image for shinjiex
Posted By ShinjiEx

Something is very fishy!?

Avatar image for mordeaniischaos
Posted By MordeaniisChaos

@Winternet said:

Nooooo. Rich needs to get to E3 and show on the bombcast . . . and get paid, of course.


I hope things go well for the folks there, but KoA was kind of disgusting with how it ripped off mechanics from the games it claimed to be "inspired by," so I'm finding it hard to find a lot of sympathy in my heart for the studio's situation.

Avatar image for retrovirus
Posted By retrovirus

This is just really sad. Hopefully the employees can land on their feet. After all of this goes down, I truly wonder what state that supposed MMO is in. I'd be truly interested to learn exactly what has been going on around it and how nothing was ever announced regarding it.

Avatar image for jazin
Posted By jazin

rich should just come to giantbomb

Avatar image for retrovirus
Posted By retrovirus

@jazin said:

rich should just come to giantbomb

He can take over as senior anime editor for Brad.

Avatar image for striderno9
Posted By StriderNo9

Whoa. Things are pretty messed up over there.

Avatar image for ez123
Edited By ez123

@BlackLagoon said:

@fini_fly said:

@PatchMaster said:

@fini_fly said:

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

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.

Not surprising at all and lol at someone thinking he put his life savings into the studio. Why put your money where your mouth is when you can just screw over taxpayers?

Avatar image for datarez
Posted By datarez

Just to clarify from the reports it looks like the $4 million was new investment in 2010. He had told Reuters last year that he had put $30-35 million in the company. 38 Studios has been around since 2006.

Avatar image for jettpack
Posted By jettpack

Yeah, all of my friends worked there. Im an illustration student at the Rhode Island School of Design and its been fucking intense here. All of my friends who were interning or contracting at 33 (and there were a lot of them, at least 20 RISD students/recent alumni) got let go. Holy shit man, Moral is low here.

Avatar image for chris2klee
Posted By Chris2KLee

Really shitty situation, I hope 38 Studios can survive this somehow, not only for the employees still left, but for the taxpayers that could be on the hook to have to pay off the debt on this loan.

Avatar image for qraham
Posted By qraham

Ooooooh god.

Avatar image for slag
Posted By Slag

man this is tragic.

Avatar image for murisan
Posted By murisan

I don't understand the people saying "oh man, the suits, fuck them." Let me see if I got this right.. 38 Studios took a loan from the state, correct? First of all, I've never heard of this before. Why not from a bank? Isn't that where most studios would get money for a project like this? Second of all, it's pretty much par for the course that the lender takes at least partial ownership of whatever project they helped fund if they cannot be repaid.

Avatar image for make_me_mad
Posted By Make_Me_Mad

Okay, wow, that update just made this whole thing even more cringe-worthy. I feel bad somewhere deep in my soul for those guys.

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Posted By UnsolvedParadox

Tough situation, hopefully the crew at 38 Studios get through this relatively unscathed.

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Posted By RoyCampbell
Avatar image for akzo
Posted By akzo

A company's first responsibility (after paying taxes) is paying their employees. This is a law and state agencies would take it very seriously. Say "wage claim" in front of your HR representative / bankruptcy administrator and see their reaction.

In 2007 '38 probably seemed like a good bet. No financial crisis and WOW was pulling in more money than they could count. Gaming was booming and a number of new studios were over funded and given too much freedom. Flagship comes to mind, but the new Bungie and Respawn seem like similar arrangements.

I have been an active fan of Big Huge for some time. Rise of Nations and it's expansion were exceptional. The Titan Quest Expansion as well as Rise of Legends were very, very good. They have been prolific for a long time and will land on their feet (or at least it's employees). KOA:R was disappointing for me, and that was apparently an appetizer for the MMO main coarse.

Maybe that dream job in the gaming industry isn't all it's cracked up to be.

Avatar image for talis12
Posted By Talis12

kickstart anyone?

Avatar image for redroach
Posted By RedRoach

@Portis said:

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.

Big Huge got a game out, which is owned by 38. But 38 studios itself has never put out a game. They've been working on that MMO for 6 years now and not a single detail has been released.

Avatar image for kidman
Posted By kidman

@RadixNegative2 said:

Why do I find this hilarious?

because it kinda is, I mean, what were they thinking? MMO? Really?

Avatar image for pepsiman
Posted By Pepsiman

@murisan said:

I don't understand the people saying "oh man, the suits, fuck them." Let me see if I got this right.. 38 Studios took a loan from the state, correct? First of all, I've never heard of this before. Why not from a bank? Isn't that where most studios would get money for a project like this? Second of all, it's pretty much par for the course that the lender takes at least partial ownership of whatever project they helped fund if they cannot be repaid.

To my understanding, the source of the money does technically come from banks; it's just that the state acted as the guarantor of the loan and agreed to take on its repayment in the event that 38 Studios wasn't able to hold up its end of the bargain. The nature of the arrangement is one of the major reasons why this is getting more press and government attention than any normal financial-related studio troubles would ever attract.

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Posted By maffrew

It's incredibly presumptive to assume we know what Rich Gallup wants for himself, but he'd be an awesome addition to the Giant Bomb team...

Avatar image for mewarmo990
Posted By mewarmo990

Didn't Big Huge Games (of Rise of Nations fame) develop Reckoning, as a developer owned by 38 Studios? I wonder if they're still working...

Avatar image for theelliotbee
Posted By TheElliotBee

They should start a kickstarter.

Avatar image for colinwright
Posted By ColinWright

Wow, this turned into a real shit show. And, man did Schilling get old.

Avatar image for ekami
Posted By Ekami

If only there was some way they could get a kickstart.

Avatar image for jaks
Posted By jaks

Didn't Amalur sell decently? What they doing with all that money?

Avatar image for nentisys
Posted By Nentisys

This is fucked up.

Avatar image for machofantastico
Posted By MachoFantastico

Things just got even worse, it's a shame to. Wasn't a huge fan of Reckoning but certainly saw potential there. Looking at it now though this sort of thing was probably going to happen right? You'd think they'd have more sense. After all MMO's aren't doing to well nowadays. Wrong time and wrong place it seems.  
Hope all the employees pull through all right, especially Rich.  

Avatar image for undiddley
Posted By Undiddley

Show them your bloody sock, Mr. Schilling. You once pitched under great duress, surely you can now pitch a reasonable proposal.

Avatar image for redroach
Edited By RedRoach

@jaks said:

Didn't Amalur sell decently? What they doing with all that money?

38 has been open since 2006. They have 379 people, where as most studios have 100. Not to mention they have quite a few big names that are probably getting paid a ton.

So, 379 salaries for 6 years, monthly 1.25 million dollar loan payments, and that MMO they're making sucking up resources.

Avatar image for patman99
Posted By Patman99

God damn it. I really hope in some way that they can get out of this hole but seemingly each new news story brings more and more doubt in my mind. I loved Reckoning and was looking forward to what they were going to do with that MMO. I just hope that no matter the situation, good or bad, the company and its employees land on their feet.... As much as a company that has a multi-million dollar debt can...

Avatar image for flappyhands
Posted By FlappyHands


Avatar image for zleunamme
Posted By Zleunamme

That is really messed up. Instead of creating more jobs, there are losing jobs. Curt Shilling is becoming another former athlete who failed at entrepreneurship.

Avatar image for ridebird

KOAR wasn't good imo.. But yeah this is why you don't go run off and do MMOs.

Avatar image for umdesch4
Posted By umdesch4

Why, oh why, do I just know that somebody out there like Goldman Sachs is sitting on a pile of naked Credit Default Swaps with 38 Studios' name on them? What I'm curious about is, who's the counter-party? No matter who loses, some too-big-to-fail Wall Street firm wins again. Go figure...

Avatar image for m0nty
Posted By m0nty

Big huge mess if you ask me.