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38 Studios execs knew MMO funding would fall short, court docs say
38 Studios execs knew MMO funding would fall short, court docs say
May 20, 2014 | By Alex Wawro




Emails sent by former 38 Studios vice chairman Thomas Zaccagnino suggest some studio executives knew that the money they accepted from the Rhode Island Economic Development Corporation wasn't enough to finish development on Project Copernicus, the company's aborted MMORPG.

WPRI-12 reports that the emails were submitted to the court of Rhode Island along with hundreds of other documents after the Rhode Island House Oversight Committee subpoenaed key figures in the case back in April.

Zaccagnino sent the email to key members of the studio in response to an email from 38 Studios' then-CEO Jen Maclean balking at the prospect of telling Rhode Island representatives that the net proceeds from the loan would be enough to allow 38 Studios to finish development of Project Copernicus.

“I really do not think we should highlight the fact that we might be under capitalized…wont go over well with the staff or board,” Zaccagnino wrote.

The state of Rhode Island's ongoing lawsuit against the 38 Studios executives and state representatives who orchestrated the loan is predicated on the complaint that the defendants "knew or should have known, but failed to inform the EDC Board, that 38 Studios was destined to fail according to 38 Studios’ own financial projections," so these email records are potentially a big deal in the case.

Back in 2012, former EDC board member Donna Cupelo filed a sworn affidavit with the court alleging that she was led to believe that 38 Studios would have enough cash to complete Copernicus if the deal went through.

Cupelo also swore that financial projections submitted by 38 Studios suggested the company would be have positive cash flow of roughly $13 million by 2012.

This proved not to be the case, as the studio collapsed in 2012.

It's worth noting that the legal team representing former EDC executive director Keith Stokes, who is one of the defendants in the case, alleged that the EDC Board was in fact "acutely aware that the capital needs of 38 Studios where [sic] in excess of $125MM as acknowledged in the 2010 EDC Inducement Resolution," in a court filing last year. The case is expected to go to trial, though no date has yet been set.


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Comments


Rodolfo Rosini
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"Give me six lines written by the most honorable of men, and I will find an excuse in them to hang him."

Michael Wenk
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Gotta love politics. I may be wrong here, but I had the distinct impression that Curt S and the 38 Studios crowd is broke. I cannot fathom a reason why they'd sue, other than politics. I guess its not their money.

Greg Scheel
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38 had plenty of money, they spent it too soon and unwisely. This really is a case of witchhunting, the politicians feel the need to cover their ass. The money should have been spent on education or filling potholes.

Michael Joseph
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Mr. Schilling did a bang up job on the hiring front.

His COO Bill Thomas.... just looks like a general "business" spook with connections here and there... but seems to me unqualified to run a startup game studio.
His CEO Jennifer MacLean's resume suggests to me she was unqualified to lead a startup game development studio.
His Creative Director R. A. Salvatore is a writer and seems to me unqualified to be creative director for a game studio making a MMO.
His Executive Art Director Todd McFarlane is a comic book writer/artist and seems to me unqualified to be director for a game studio.

They wind up having to hire twice the number middle managers to make up for the fact that their upper management "dream team" lacked the experience to lead a startup game studio.

And what happens when your executive team knows they are out of their depth and by definition not earning their pay?


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