Schilling's 38 Studios leaving Massachusetts for Rhode Island

@Aerothorn Yes, because running a business like a charity is what everyone should do. God forbid he do something in the interest of his employees and the business itself.

Yeah, what an asshole.

@ninjadan I think you missed the point. Schilling operates on a moral code. His politics are small-government, low-taxes, no-government-handouts. Yet now he is taking taxpayer money as a handout for his company. Whether it's good for him or his company is irrelevant to the issue of moral hypocrisy: it's easy to tell other people what they should do, but isn't worth a lot if you don't live those values yourself.

@Aerothorn Oy, not that I want to turn this in to a political thing, but my understanding is that he and his ilk are of the mindset that FEDERAL government should be small and that it's up to the states to make those decisions (i.e. tax burdens, state entitlements, etc.) based on how the people vote. This was the original intention of the framers of the constitution as well.

The idea that states can extend tax benefits, loans, et al. to a business, while not originally envisioned by the founding fathers, is still something that falls to the people of the state to allow or disallow. Mr. Schilling is doing the best thing he can for his business, he is leaving a state with an enormous tax burden, an imploding entitlement system and a hostile business environment for a state who is offering business-friendly incentives in order to survive.

I completely disagree with the "taking a handout"--it's a state-funded loan. Something that is SUPPOSED to be paid back. It's not a "rescue a failing company" bailout. It's an incentive to bring business to RI and that does not go against the idea of "small government".

@ninjadan I recognize your distinction between Federal and State government, and yeah, Schilling is probably making such a distinction.

I'm a little confused over your statements about Massachusetts, though. What is the enormous tax burden you speak of? Sales tax is pretty standard, income tax is strangely flat and therefore is actually LOWER for the likes of Curt Schilling. And what do you mean by "hostile business environment?" I'm legit curious - I go to school there most of the year and haven't encountered this sentiment yet.

(I'm leaving aside the imploding entitlement programs thing because that seems like an entirely different discussion)

@Aerothorn A really good resource is the Small Business and Entrepreneurship Council's annual ranking of each state's small business "friendliness". They take in to account all the various tax requirements, tax breaks, employee requirements and many other data points. Their 2009 report can be found here: http://www.sbecouncil.org/uploads/SBSI2009.pdf

Suffice to say, the past several years, MA has been ranked in the top 5 worse states for small businesses. And while RI has been ranked right down there with MA (a mind-boggling thing, indeed), the combination of the loans and the tax incentives RI has put on the table, provide a significantly increased chance for survival in a hostile economy, while still allowing everyone to be relatively close to home (i.e. not move too far out of the area).

The other thing I wanted to point out that was missed earlier is that these are guaranteed loans, meaning two things:

1. 38 is not obligated to use all the money, or even take all the money--they're just guarantees that if 38 needs to acquire more money, they have a credit line up to $75 million

2. IF 38 takes a loan, ALL of their assets and IP are instantly up at collateral. Which means if they default, the state of RI owns 38 in its entirety (at least that's how I understand it, it might be a small ownership if less is borrowed. Can someone clarify further?)

Anyway, again, there are a lot of things in play here, and I respect the fact that Mr. Schilling is running a business here and is making the moves to ensure the best chances for success are available to them.

@ninjadan Thanks for the info. While I still (on a purely personal level) have some reservations about the structure of this deal, your link is nice to have and I appreciate your willingness to expand upon and back up your points.

Though I think we can agree that it would suck really bad if 38 DID fail; if you're correct about the ownership clause, well, Rhode Island probably shouldn't be (and doesn't want to be) in the business of running or liquidating game companies.

@sigma8

"$80,000 a year"

LOL

@sigma8

isnt it like.. half that on average?

@sigma8

I don't think he has to hire 450 programmers. He will probably hire 300 janitors at minimum wage.

@Jerk Face What's funny about that? You know Schilling will have to provide employee benefits, too, right? An employee that costs him $80,000 probably sees a salary in the $40,000 - $50,000 range.

@sigma8

The game industry is not well known for employment that even comes close to $80k/year. $45k is an experienced person salary with around $36k being the norm.

@LaughingTarget See my above post about BENEFITS.

@LaughingTarget Sigma is right - it's the helath care and whatnot that really costs a lot of money.

Not that Schilling cares, given that he insists that the "free market" keeps health care costs down all by itself.

@sigma8
I doubt the average videogame developer or employee at a development studio will require 30k in health benefits a year, but I get what your point is.

You also have to consider that a lot of the time benefits come directly from one's salary, so someone with a 45-50k salary may actually take home 25-30k after taxes and benefits.

@Lerkero It doesn't really matter either way. Even if my estimates on benefits are highballed (probably), It's still a $75 million dollar loan plus a mandate that his company is at least 451 employees (himself + 450 state-mandated hires). 450 people will cost him him millions to keep employed over a number of years. If he's paying them $50K/year (total, including benefits), that's $22.5 million per year. Multiply that by as many years as he needs to keep them employed.

His game is going to have to rake in some serious cash just to break even.

@sigma8

The free markets do keep costs down. The problem is there isn't anything remotely resembling a free market health system un the USA, what with the 55% government spending on care and an average of 14 feet of regulatory paperwork that needs doing.

@benheck Michigan, my state, is now the cheapest state to film in because they have been throwing tax breaks at the movie studios left and right. Earlier last week traffic was stopped through the downtown of my town (got stuck in it on my way to work...) to film Scream 4. It's a complete annoyance to the locals like me who aren't used to all this attention and it costs the city and state more than it brings in.

@zaxon I noticed that too, but a couple of days after this post. Thanks for making the connection.