38 Studios may be gone, but its legacy remains: $112.6 million in debt.
If there's one rule in investing, it's to not invest in video game companies. No one has faced this truth harder than the state of Rhode Island, who now finds itself responsible for over $112 million in debt to lenders who financed professional baseball pitcher Curt Shilling's untitled MMO, referred to as Project Copernicus. The studio went under and now RI is on the hook for the original $75 million loan, along with some serious interest. However, Rhode Island Governor Lincoln Chafee is now considering not repaying lenders.
The loan originated with RI's Economic Development Corporation, which mixes private investments with state money to bring jobs into the state by financing business ventures. So legally, RI could simply drop the loan. However, Chafee has remained steadfast in his stance that the loan must be repaid.
In a statement given to the Providence Journal, the governor's spokeswoman explained that the administration is looking into possibly dropping the debt from the state's books. She stated that while the governor still wants to repay the loan, that "doesn't mean you don't analyze what the situation is, or gather data to understand the ramifications of what that decision would be."
According to a poll on that same story, RI residents are mostly in support of dropping the debt. So in an effort to please voters, Chafee could very well forget the loan, leaving lenders hanging. I guess that's what they get for investing in our crazy little industry.