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Horror stories from 38 Studios

Jun 13, 2012, 12:31 PM EDT


We’ve heard a lot of back and forth about what went down with the folding of Curt Schilling’s company. The Rhode Island politicians have grandstanded, Curt Schilling has postured and there is enough ugliness to it all that most people may want to wash their hands of it.

But before you wash your hands of it, go read this account of the spouse of a 38 Studios employee. In it she explains just how quickly and thoroughly her family was uprooted, then cut loose and then dealt a series of devastating financial blows at the hands of a company which didn’t seem to give a crap. It’s nothing short of harrowing.

And no, the point here isn’t to mock and shame Curt Schilling. He’s a handy tie-in to make this quasi-relevant to a baseball blog, I will admit that. The point is to highlight a scenario in which a government bent over backwards to lure business (while caring little if any to regulate business) while a company treated its employees like tax-break and incentive vouchers, caring little for what happened to them the moment money stopped being made.

It’s an all-too-common story, frankly. And it amazes me that no one ever seems to care when it happens nor cares to learn from it while supporting policies that allow it to happen over and over again.

  1. Ben - Jun 13, 2012 at 12:38 PM

    But but but capitalism’n’stuff.

    Companies don’t care about their employees, they care about extracting surplus profit and rents from them in as short a term as possible.

    • El Bravo - Jun 13, 2012 at 12:48 PM

      That’s not true of all American companies or of companies working within a capitalist marketplace. It’s also a bad business model, as this story reinforces, to not care for your employees to a certain extent. See Goretex Co.’s business model as an extreme counterexample as to what companies CAN do for their employees. Aside from that example, many companies can, and do, offer employee friendly services, corp discounts and other benefits that are not always mandatory but are offered anyway (gym memberships, anti-smoking seminars & pre-tax transit vouchers are three examples from the place where I work..none are required by law, but all are offered). It makes sense to make and keep your employees healthy and happy. Higher morale in the workforce helps create a better product. It also save the company money in the long run…so you know…win-win.

      • stlouis1baseball - Jun 13, 2012 at 12:55 PM

        On point Bravo. As cheesy as it sounds…happy employees truly are productive employees. You treat your employees well…and you will be rewarded accordingly.
        You treat them poorly and they are Free Agents perfectly capable of going elsewhere.
        This seems to get lost in the mix at times.

      • Ben - Jun 13, 2012 at 12:56 PM

        Definitely, and I’ve witnessed first-hand the positive effects that can have (many friends who work at Google) but it doesn’t change the simple fact that, put in Marxist terms, the purpose of a company in a capitalist system is to extract surplus value from labor. It can be great for some workers for all the reasons you’ve listed–it can, and usually is horrific, as “sales associates” at Wal-Mart, or programmers at 38 Studios will tell you. Companies caring about their workers is the exception, not the rule.

      • myopinionisgarbage - Jun 13, 2012 at 12:58 PM

        Capitalism? This has nothing to do with capitalism. This is what happens when the government offers subsidies. It’s free money to be abused, and you can rest assured it WILL be abused. Have you ever met anyone that uses OTHER peoples’ money as they would their own? Capitalism doesn’t work with government handing out free money. Regulate, yes, but don’t just give stuff away. It lessens the value of things that other people work very hard to accrue.

      • El Bravo - Jun 13, 2012 at 1:26 PM

        I respect your opinion and completely disagree. I wouldn’t call it a “garbage” opinion though. There is a place for government subsidies (tech/health innovation, green tech, healthy food) and places where they should they should not subsidize (farmers, oil). Further, GM needed the bailout to survive and it was a success. Cable and utilities are regulated by the government as well. Do you want Comcast to be shittier to you than they are already? It’s one of the government’s jobs to help maintain and the market in the most healthy state possible. That said, this is a very fine line, crossed routinely by the government and sometimes not crossed enough, in my opinion. These blanket statements (i.e. uninformed opinions) are tiring from the folks on the right…government spending, subsidies, bail-outs and regulation can be very good things and are absolutely necessary.

      • myopinionisgarbage - Jun 13, 2012 at 1:41 PM

        We’ll have to completely disagree then, because as an econ major that ISN’T from the right wing, nor do I feel I have tired arguments, I think subsidies and bail outs are the worst thing the government can do to foster a healthy and thriving capitalist environment. Why are subsidies good? You’re talking about “tax breaks” with oil and other stuff. That is not a subsidy. It is writing down the cost of business based on a tax exemption that was passed into law. I’m talking about the government handing over FREE money and near interest free loans to hand picked corporations or persons. THAT is never good for anyone, ever. It leads to the mistreatment and improper allocation of capital, and it devalues every other corporation in that sphere of business. Also, I think I said previously…regulate YES. That should be the end of the government’s role in providing a healthy business environment.

      • El Bravo - Jun 13, 2012 at 1:46 PM

        I do agree that free money should never just be handed out. There should always be expectations and goals that must be met, once the money is loaned (note: it is a loan, thus should always be repaid). But to say subsidies are always bad is wrong. Again, innovation would never have been so impressive in our society if the government didn’t chip in. Some of that was done by subsidizing start-ups. Finally, I know in this case we’re talking about a game company, so in essence we agree that they should not have received that money.

      • Liam - Jun 13, 2012 at 2:24 PM

        I too majored in econ. Day two of my first micro class was on externalities, which when positive, are a good reason for subsidies. You either missed that day, completely ignored it, or are getting a terrible econ education if you don’t ever see a need for subsidies. Plus, tax breaks and subsidies are functionally the same thing. Charging someone less money and charing them the same amount of money, then handing them a check, accomplish the exact same thing.

      • myopinionisgarbage - Jun 13, 2012 at 3:08 PM

        Negative Ghostrider. I fully understand what positive and negative externalites are, and I fully disagree with subsidies…still; mainly because the positive externality resultant of a subsidy is very nearly never the reason the subsidy was given. A positive externality is a great reason to GIVE a subsidy, but it isn’t usually why the subsidy was given, and I think you’d be naive to not believe that.

        In my opinion, the overwhelming majority of subsidies are bad. That doesn’t make my econ education any less than yours. It makes my opinion different from yours. However….

        A legal tax exemption is NOT a subsidy no matter how many times the claim is made or by whom. Fact is fact and cannot be altered by opinion, ideology or repetition. Tax exemptions are legal tools allowed across an entire industry. Maybe these are dumb rules. Maybe they need changing. But in no sense can they be called subsidies—i.e., money taken from Smith and given to Jones. The failure to tax Exxon more does not increase your payment to the IRS by one red cent. So, in short. Get bent.

      • snowbirdgothic - Jun 13, 2012 at 5:07 PM

        The question should not be “what kind of company is it?” It should be “would the state get sustained economic development in return for investing in that company”. Game companies have employees who buy homes, buy cars, go out to lunch, and otherwise spend money locally, the same as telecom companies or manufacturers or any other large employer. Whether Rhode Island should have invested in /this/ particular company, on the other hand, is an entirely different matter.

      • Liam - Jun 13, 2012 at 5:40 PM

        You made it sound as if you were always against subsidies. I can certainly agree that in practice they’re usually terrible, but there’s value in a well given subsidy. I think we actually agree here though, so no need to harp on it.

        Please though, explain the functional difference between collecting $20,000 in taxes then cutting them a $10,000 check and just taxing them $10,000 to begin with. I guess there’s a small difference in transaction costs, but they both do the same thing. Neither not taxing Exxon or cutting them a check increases any taxes, because it is going to be funded on the bond market for now. An equal tax cut and a subsidy both raise the deficit equally and give that company the same amount of money.

      • myopinionisgarbage - Jun 13, 2012 at 7:50 PM

        Well, for one thing, a tax exemption is available to everyone in a given industry/sector. Subsidies are not. That right there is enough to differentiate between the two. It’s always been pretty clear to me that when people use the word “subsidy” they’re often misusing it(usually on purpose in politics), or don’t really understand what a subsidy truly is. People keep calling them “oil subsidies” for example, but no one calls them “abortion subsidies.” They’re tax exemptions. (I’m a HUGE planned parenthood proponent, this is not a shot at them, it’s merely to prove a point) Let’s just agree to agree on some stuff and disagree on others. Sorry for the verbal jab earlier, that is very unlike me and it was unnecessary.

      • Reflex - Jun 14, 2012 at 3:12 AM

        I just want to point out that tax exemptions are not necessarily industry wide. Especially at the local level. There are dozens of corporations I know of in my state that do not pay a variety of taxes specifically as part of the local government’s incentive packages to lure those companies to the state, and at the federal level many tax exemptions are written so specifically that they can apply to only a single corporation. Both GE and Monosato are notorious for huge amounts of special exemptions that apply to only them.

        Conversely, subsidies can indeed be industry wide. Probably the best known is the ethanol subsidy, which just finally expired after 40+ years of paying refiners for ethanol added to the fuel mixture. This was not targeted at any single company, but instead at the entire oil and ethanol industries.

        Functionally though, both perform the same function and both can be good or bad, depending on how they are crafted.

    • stlouis1baseball - Jun 13, 2012 at 12:57 PM

      Yes Ben. And employees who are being taken advantange of (or even feel as much) are free to leave at a moments notice.

      • Ben - Jun 13, 2012 at 1:01 PM

        Yeah, ’cause that’s how the labor market works. People are equal, independent actors free to make profit-maximizing decisions. I need a rolls eyes emoticon.

      • stex52 - Jun 13, 2012 at 1:14 PM

        In concept I agree with you, SLB. I didn’t read the horror story above, but I just got back from visiting family in Rhode Island. The problem here was that the company lured the families into a move and then failed to meet its promised obligation to sell their previous properties. So they weren’t just free to walk, the company committed something like a fraud on them that limited their freeedom of action. They now had two houses they couldn’t sell in a bad real estate environment (one being in Providence), and with poor local job prospects. Free agency was not so free for them.

      • myopinionisgarbage - Jun 13, 2012 at 1:27 PM

        Ben, you sound like you might be displeased with your current employer.

    • myopinionisgarbage - Jun 13, 2012 at 1:12 PM

      But but but but socialism’n’stuff.

      See Greece for outcome.

      • heyblueyoustink - Jun 13, 2012 at 1:45 PM

        Oh dear, don’t bring that reality up.

      • myopinionisgarbage - Jun 13, 2012 at 2:06 PM

        Thumbs down?


        Estonia monetary policy vs Greece monetary policy.

        You will see the empirical evidence of how well perpetuating the socialist spending frenzy worked vs suffering through a couple of years of austerity. HAS THE WHOLE WORLD GONE CRAZY?!?!?

      • myopinionisgarbage - Jun 13, 2012 at 2:24 PM

        Excuse me, google the fiscal policy. They’re both pertinent, but one is more relevant to the impending doom of their economy.

      • Liam - Jun 13, 2012 at 2:28 PM

        I am guessing the negatives are because you used the old false dichotomy of “completely unregulated capitalism vs. socialism”. You could have a system that protectec employees for this kind of obvious exploitation and not give public pensions to anyone who worked until the age of 50. That system would still be called capitalism and would avoid the problems Greece is having.

      • myopinionisgarbage - Jun 13, 2012 at 3:14 PM

        You do a lot of guessing and assuming for me. Thank you for your eager help in letting me know what I was thinking.

      • Liam - Jun 13, 2012 at 5:42 PM

        Read carefully, chief. I was actually guessing at why people were giving you the old thumbs down, which you yourself wondered about.

  2. danaking - Jun 13, 2012 at 12:41 PM

    The turning point may have been when employees stopped being Personnel and became Human Resources. Coal is a resource. Oil is a resource. Capital is a resource. Being a person doesn’t enter into it anymore.

    • paperlions - Jun 13, 2012 at 1:47 PM

      When have businesses as a group (recognizing that there are some very nice exceptions) ever viewed employees as personnel and not resources? Before the formation of unions, people were most certainly resources…expendable ones. The vast majority of companies have always viewed employees as fungible resources.

  3. pftbillsfan - Jun 13, 2012 at 12:48 PM

    Sadder yet is even if they win they lose. Legal fees will erase any financial gains they had made in the years prior to this fiasco. Meanwhile I think it is safe to assume Curt won’t be on the street nor will he be held personally liable. Your right, the fact this isn’t a top news story speaks to an even sadder truth about society.

  4. cur68 - Jun 13, 2012 at 12:50 PM

    Jeez, that sucked. My life may not be a picnic but my employer isn’t trying to bone me like that. Seriously, how do governments keep screwing over their constituents like this while allowing large businesses to get away with this kind of jackassery? Surely a platform of deregulation has been shown to be nothing but a vehicle for a few to get filthy rich at the expense of the average person? How do politiciians run on this as a means to get elected? Actually, that’s rhetorical. The tried and true appeal to paranoia and government interference seems to work just fine.

    • ras1tafari - Jun 13, 2012 at 2:09 PM


      Do you think for one second Schilling would ever pay back RI or disperse his profits (even amongst his own employees?) HELL NO!

      But we, the tax payers not only have to subsidize his BULLS__T business, but he actually expected another bailout!

      F–K you Curt. This is why I am a tax protestor.

  5. skerney - Jun 13, 2012 at 12:54 PM

    Half of America: Schiilling is a job creator!

  6. Jonny 5 - Jun 13, 2012 at 1:08 PM

    A liberal state handing out millions of dollars to useless causes? Nooooo, can’t be. This is the type of government people don’t need. And before all you people pile on me for saying that, just take it in and know it’s true. Does this country NEED a company like 38 studios? Obviously not, they couldn’t turn a profit. This is a “gaming company” we’re talking about. This is a prime example of pissing away tax dollars. I’d hope more foresight is used by those in power in the future. This was just dumb, and shame on Schilling for being a part of it all while preaching “conservative values” as if he knows what they are. I’m not what would be considered a conservative or right winger but even I would have never approved of this type of wasteful spending by gov’t.

    • myopinionisgarbage - Jun 13, 2012 at 1:15 PM

      Amen sir!

    • zakharovsa - Jun 13, 2012 at 1:17 PM

      There’s nothng liberal or leftist about handng out free money to corporations.

      • Jonny 5 - Jun 13, 2012 at 1:30 PM

        Besides being more prone to do so.

      • El Bravo - Jun 13, 2012 at 1:31 PM

        zakharovsa, this is true. I agree with J5 about wasteful spending by the government, but the right has been far more wasteful historically (I’d give examples, but that’s gonna get more cans of worms opened…). Not saying J5 was politicizing, but the whole lefties spend mantra is weak and tired. It’s just the left spends on shit the right doesn’t like to spend on…that’s it.

      • Jonny 5 - Jun 13, 2012 at 1:32 PM

        Actually I’d like to retract the whole “more prone to do so” comment as I think both sides have their own ways of handing money out to corporations and both sides do it at an alarming rate.

    • APBA Guy - Jun 13, 2012 at 1:55 PM

      Actually, the notion of tax incentives to lure corporations is known as being “pro-business” and is a decidedly right-wing precept, though it need not be exclusively. Failures always happen in this environment, Solyndra being a popular example right now. The cause is usually the same, in that Governments at all level suffer a failure at some point in vetting a specific company. In Solyndra’s case, DoE staff warned that their business model was unsustainable, and relied on a cost curve that was unlikely to occur. Inexplicably (in that no good explanation has yet been provided) money was approved for Solyndra to the tune of over $ 500M.

      The key measure is overall success, so despite Solyndra, is California growing private-sector jobs? The answer is yes. Are we as a nation right to subsidize an emerging market? Tougher question, but the practical answer is that the Chinese heavily subsidize key markets to competitively advantage their firms compared to us and Europe. We do the same with fossil energy, financial, and especially defense industries which are all heavily subsidized. Europe does the same with aircraft and other precision manufacturing.

      Rhode Island was trying to do something positive, but lack of vetting failed them, and the families involved, in this case. How is their program working overall is a question I have no insight into. Likewise I have no insight into how similar programs are working in Tea-Party driven states like Ohio and Wisconsin, where governors there have loudly championed pro-business attitudes.

      That this is a tragedy for the families involved is indisputable. And therein lies a huge difference in the approach between states, how much support for out-of-work families is available, and how much prosecution is involved in company executives who failed these families so flagrantly.

      • Jonny 5 - Jun 13, 2012 at 2:17 PM

        Tax breaks are much different than handing money to corporations that are destined to fail. And Tax incentives such as GE enjoyed (they paid nothing) while profiting in the +billion dollar range definitely did happen under a liberal leaning potus. So as I said above the lines are blurred to who hands out more free money, and I really don’t care. It has to be better regulated no matter who is in charge.

      • Reflex - Jun 14, 2012 at 3:17 AM

        Which liberal leaning president had the right to rewrite the national tax code? You know, the one written over a century by congress…

  7. chew1985 - Jun 13, 2012 at 1:21 PM

    To me, the saddest part of the story–and similar stories, of which there are many–is how so many Americans don’t really care about their fellow Americans any more. Many of us have become so self-centered, sometimes out of necessity but mostly out of apathy, that we don’t think twice about what’s going on with those outside our family and friendship circles.

    It is always very easy to simply say people have “control over their own destiny” when in truth that is less and less the case in this country. Anyone can get rich; anyone can pull themselves out of poverty if they just “work hard enough.” Well I know people who work more than “hard enough.” They have two jobs, but they are barely avoiding losing their homes, their marriages and their sanity.

    The self-centeredness allows the rest of us to not even think twice about what’s happening around us. Therefore we don’t get involved. We don’t really care, except enough to comment on these stories. But someday this might be your situation. So don’t be surprised if it seems like there’s no one around to listen or try to help. It’s the new America. And if anything, it’s getting worse, not better. How many neighbors on your street have you talked to in the last week, month? Get off your computer and discover some new friends.

    • beanster71 - Jun 13, 2012 at 1:33 PM

      Well said and, sadly, too true.

    • - Jun 13, 2012 at 3:10 PM

      Exactly. And there are many layers to what you’re talking about. But if we all stepped outside our comfort zones and tried to do something for another human even every once in a while the world would be a lot better. Even it’s standing up in a meeting and saying: “I don’t think this is a good idea, and it ain’t right”.

    • snowbirdgothic - Jun 13, 2012 at 4:07 PM

      One might go further and note the unpleasant trend toward demonizing our fellow citizens who get caught in the gears. “They didn’t work hard enough.” “They should have known better.” “They should have invested in railroads and shipping.” All of which is a way of convincing ourselves that it happened to other people because they did something wrong, and it can’t happen to us.

      The teams at 38 and Big Huge were pros. They were industry vets who knew what they were doing and who, I’m certain, thought long and hard before signing up with a new company in a place that wasn’t a gamedev hub. It’s a big risk moving to an area where there’s only one gamedev studio; if it goes under, you’re screwed. And yeah, they worked hard enough. They did their research. And maybe railroads and shipping were out, but they invested in their careers, and trusted their employer to hold up its (legal) end of the bargain.

  8. deathmonkey41 - Jun 13, 2012 at 1:26 PM

    It’s an all-too-common story, frankly. And it amazes me that no one ever seems to care when it happens nor cares to learn from it while supporting policies that allow it to happen over and over again.

    Yeah- we should be using more money to finance solar panel companies! Come on, politicians don’t bite the hand that feeds them.

    On another note, if the employees wind up filing a class action lawsuit and Schilling has to testify in court, will he come in wearing a bloody tie?

  9. iamnotacoolguy - Jun 13, 2012 at 2:54 PM

    As someone who works for a small/medium company, it is truly a travesty what the employees have had to go through. I could never imagine the people that I work for treating us like that. Corporate culture is very important. Our company has an open book policy regarding almost everything. Like every company we have had our problems during the current recession. The company was open and honest about what was happening at every turn. Unfortunately this is not the norm in America anymore. Companies seem to care less and less about people and more and more about profits. Every business is in business to make a profit….but people really make the company. The fact that companies see workers as merely tax exemptions/numbers on a spreadsheet and not as human beings is disgusting. The lies on top of lies on top of lies to these poor people is inexcusable. But hey: Corporations are people my friend! Modern business in America seems to be a soulless quest to turn the biggest profit no matter how many people’s lives you ruin. I feel lucky every day that I work at such a great company owned by good people. I realize that not everyone is so lucky.

  10. jayquintana - Jun 13, 2012 at 5:01 PM

    Feel bad for the people of Rhode Island and, of course, the employees who got laid off, but… why did anyone think Schilling — or any baseball player, for that matter — would be capable of running a gaming company?

  11. 303bengalguy - Jun 13, 2012 at 11:55 PM

    I’ve never seen intelligent banter in a sports thread until now. Thank you guys! I’ll have to read the baseball side of NBCSPORTSTALK more often…

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