Rhode Island's $75 million loan guarantee to 38 Studios is starting to look shaky thanks to state general treasurer and gubernatorial candidate Frank Caprio, who expressed some support for the deal in past weeks but now says it's a bad idea for taxpayers.
75 million bucks is a lot of money, even for a U.S. state and especially when that state is tiny Rhode Island. So eyebrows were raised when 38 Studios, founded by former Boston Red Sox hero Curt Schilling, announced that it was moving to the ocean state in pursuit of the hefty loan guarantee. The company promised to bring 450 new jobs to the state by the end of 2012 and Rhode Island Governor Rick Carcieri said the studio's presence would make the state "a real player in the digital-media area."
Others were quick to point out, however, that 38 Studios hasn't actually done anything yet and that $75 million, well over half of the entire budget allocation to support high-tech and knowledge-based businesses in the state, was a lot of green to throw at a single, unproven company. Caprio, the state general treasurer and Democratic candidate in the upcoming election for governor, didn't denounce the deal outright but did call for changes, including a guarantee that "indirect jobs" created by the studio be located in Rhode Island, that the state take equity in the company and that 38 Studios be made liable for penalties if it starts killing jobs "too soon."
But now he's changed gears and is attempting to block the deal entirely, at least until after the election. Caprio has joined other candidates in condemning the loan guarantees as being too risky for taxpayers and said he has approached credit rating agencies Moody's and Standard & Poor, asking them not to review the contract until the election is over.
"I am not going to stand by and watch us gamble taxpayer dollars on a bad deal when there are thousands of small businesses in need of more access to capital," Caprio said in a press release. "Our state's leaders and EDC are unwilling to stop this deal or restructure it. That's why I've gone directly to the potential investors to stop this deal and to protect our taxpayers."
Shockingly, not all of Caprio's fellow candidates see his actions as entirely for the benefit of Rhode Island's citizens. One Republican described it as "grandstanding," while the Moderate party candidate said it was a "nasty political stunt." Independent candidate Lincoln Chafee supported the move, however, telling Turn to 10 News, "The main thing is to stop the deal ... so it's great to have General Treasurer Caprio now join me."