Former Pitching Great Curt Schilling Strikes Out: Company He Owns Declares Bankruptcy

by Mike Mintz on August 9, 2012 · 2 comments

in Bankruptcy

Former Boston Red Sox pitcher Curt Schilling’s videogame company, 38 Studios, LLC and a related Maryland company, recently filed for bankruptcy protection in Delaware.  Late last month, Schilling made local news headlines when he publicly blamed Rhode Island Governor Lincoln Chafee for the bankruptcy.  However, it was later revealed that the company was headed for bankruptcy before Governor Chafee publicly mentioned its financial predicament.

According to court documents, 38 Studios spent more than $133 million before it declared bankruptcy. It claims that it owes more than $270 million. The expenditures include the company’s operation expenses, totaling $118 million.  These expenses were incurred between its founding six years ago and December 2011.  The company did not earn any money during this entire time period.

Curt Schilling paid the company’s bills.  The company later used $75 million in proceeds obtained from a loan that was backed by Rhode Island taxpayers to fund its operations.  The company was lured to Rhode Island two years ago from Massachusetts after receiving this loan. The Rhode Island Economic Development Corp., which awarded this loan, is looking to seize equipment, software and intellectual property belonging to 38 Studios.  The Rhode Island Economic Development Corp. is also seeking permission to place 38 Studios into a state receiver’s hands.

Schilling contends that the company’s collapse cost him his entire baseball fortune. Time for a comeback?

 

{ 2 comments… read them below or add one }

Steven J Fromm wrote onAugust 9, 2012 at 10:59 am

This sounds like a cautionary tale. Was there not some attorney, CPA and financial advisor involved here at the inception of this deal cautioning him about putting all his wealth at risk. Was it his on hubris and althete mentality that got him into trouble here, assuming he ignored conventional wisdom about diversification and risk.
More fundamentally, why would someone with $133,000,000 take on risk? What is the point of doing so? He could have conservatively invested this money with no risk and lived out his entire life without any problems. This whole scenario was ill conceived from the beginning. Just unbelievable.

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Mike Mintz Mike Mintz wrote onAugust 22, 2012 at 10:22 am

Why do drug dealers still live with their mothers (see Freakonomics)? Despite having all that money, Dykstra joins that illustrious club of people who get too much, too fast and have no idea how to digest what’s on their plate. Reasonable people would assume he would have a business manager or some type of advisory team in his corner, but even with the best professionals advising him, if the client is going to be irresponsible then there is little that can be done for them. Sad to see it happen to such a baseball legend.

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