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Schilling in 2010: ‘We’re Not Looking for Tax Credits’

Monday, May 21, 2012

 

Less than 20 months after Curt Schilling told a Boston radio station that his video game company was not looking for tax credits in exchange for moving to Rhode Island, state officials say the troubled 38 Studios has applied for roughly $21 million in tax credits between 2011 and 2012.

Schilling’s 38 Studios defaulted on a $1.125 million payment due to the Economic Development Corporation (EDC) on May 1 and failed to make payroll last week. The company has already used up $49.8 million of a $75 million loan it received two years ago. The rest of the funds are set aside to pay bondholders.

In 2010, the EDC voted to give Schilling’s company a $75 million loan guarantee in exchange for moving his business (and 450 jobs) to the Ocean State. The deal came only two months after the General Assembly voted to expand the EDC’s loan guarantee fund from $50 million to $125 million.

At the time, GoLocalProv reported that a loophole in the Motion Picture Production Tax Credits law could have allowed 38 Studios to grab nearly all of the credits before other film and television projects could utilize them.

“I think that would be the icing on the cake,” URI Business Professor Dr. Edward Mazze said at the time. “I think that would be a smack on the head.”

But Schilling argued that he had zero intentions of applying for the tax credits in a WEEI radio interview (the conversation was transcribed by WPRI) that ran the night before GoLocalProv published its story. He said tax credits were meant for larger companies and suggested 38 Studios’ “burn rate” wasn’t high enough yet.

“Unbeknownst to a lot of people, we’re not looking for tax credits,” Schilling said in the interview. “Tax credits are an endgame play.”

At the time, Schilling talked up what the deal could mean for Rhode Island’s economy. He said he was going to move nearly 100 employees to the state, which he said would generate millions of dollars in economic activity and tax revenue. He made it clear he was not looking for tax credits.

“Tax credits for us are not – they were never, ever something we were after,” he said. “Because we’re in the middle of development. We don’t need tax credits. We need capital. And that’s why I continue to fund [the company].”

It is unclear how much Schilling, who made over $114 million in salary pitching for the Philadelphia Phillies, Arizona Diamondbacks and Boston Red Sox, has poured into the company from his own fortune, but the number is believed to be significantly higher than the $4 million some media outlets have reported.

As of Friday, 38 Studios had still not paid its employees and executives were pleading with the state to help keep the company solvent. Governor Chafee, who was against the deal in 2010 as a candidate, said he is against offering anymore state aid to Schilling’s company.

“It’s a generous deal,” Chafee said.

Dan McGowan can be reached at [email protected]

 

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