After years of spin, lack of comment, and problematic answers, we bring you an analysis of the sworn and true answers of the three public officials to occupy the governor’s office since the deal was struck.

DONALD CARCIERI
After multiple days and 562 pages of deposition testimony, it is clear that former Governor Don Carcieri, the man responsible for the 38 Studios deal as chairman of the EDC, is nervous. Throughout the transcript, he peppers his answers with “you know” – a sign of anxiety.

When Carcieri took office in 2003, he touted himself as a pro-business reform candidate, campaigning on a promise to bring a ‘Big Audit’ to the convoluted state government. One of these moves included merging the Economic Policy Council and a smaller EDC into the single agency that approved the 38 Studios funding package. He says of the decision:

[I]t was a board decision. This was not my decision alone. I mean, this was a quasi-independent corporation. We went through lots of pains to restructure the whole corporation, created a whole new board, and as I said, I felt very pleased at the quality of the people we were able to attract, and I wanted to make sure that they could do their job.

Carcieri thought they had a prize in 38 Studios, a company that would spur the growth seen in the Cambridge, Massachusetts high-tech corridor on Route 128 decades earlier. At one point, Robert Stolzman, now a defendant in the lawsuit, wrote to the governor thanking him for involving him in the 38 Studios issue. With predicted earnings of $50 million by 2015, they believed they were going to be responsible for a high-tech renaissance.

They expected that they had a real winner in terms of a game and what they were doing in developing with a lot of industry expertise in this multi-player game was going to be very well received. They, you know, were supported in that, to my knowledge, by entertainment arts [Electronic Arts video game publishing] who understood the industry as well.

But there were warning signs from the outset that Carcieri refused to heed. One board member at the EDC, Karl Wadensten, voiced concern about the total monies being dedicated towards the project. Rosemary Gallogly, a seasoned adviser with years of experience regarding government accounting, raised multiple red flags that the governor blew off as infrastructural issues, part of the ‘big government’ he had vowed to fight.

-I don’t recall reading the whole [Strategy Analytics] report [regarding risks and possibilities]. Often they have executive summaries is what I would read, then I would skim, possibly, through, but what I’m saying to you is this is not my recollection of what was presented to the board meeting. That there was a slide dec. like all — PowerPoint or something that, you know — the sum and substance was, on balance, positive that’s my recollection, Tom.
-You’re saying your recollection on balance was positive?
-Yeah.
-Of the Strategy Analytics report was positive?
-Yes.
-Now, but you don’t know if you actually read the entire report or not, do you?

Two things become abundantly clear from Carcieri’s testimony.

First, despite boasting about his business savvy, he remained woefully out of touch with the industry he was trying to get involved in and remained so last year when deposed. Throughout the transcript, he consistently confuses the name of EA Games, the third-largest video game firm on earth, calling them ‘Entertainment Arts’ instead of Electronic Arts. When discussing the second title 38 Studios was working on at the time of their bankruptcy, a massive multi-player online game akin to the popular WORLDS OF WARCRAFT, he is hazy on the terms used in distribution, calling the industry-standard subscription-based servicing of those titles a “lease.”

That is a sign of bad business management. The Oracle of Omaha, Warren Buffett, has been very open with how he made his fortune, explaining that, if he cannot understand a prospective investment and how the company works when he sits down at his kitchen table with the spreadsheets, he passes on the investment. Buffett does not have access to the secret formula for Coca-Cola or understand how Dairy Queen produces all their dessert items, but he does understand how to drink soda and take his grandchildren out for ice cream. The trick with smart investment is understanding exactly why a product or service will have success, not due to innovation as much as appeal. In the case of 38 Studios, Curt Schilling could and probably should have done what most sports players do in retirement when they get involved with video games, release a title based on his name recognition and sports career. It may not have been as exciting as the roll-playing fantasies he hoped to develop with sci-fi author RA Salvatore, but no one has seen John Madden crying on the way to the bank. Carcieri and Schilling were both clueless about everything from basic game programming to distribution models. The former Governor was so out of touch he did not even realize that the board he was chair of had not hired IBM and Wells Fargo as consultants! That he did not know he was not the first to talk with Schilling about the venture is merely the pinnacle of his lack of connection, regardless of whether politicians like William Murphy, Gordon Fox, and others lied to him.

Carcieri also seems to have let his ideology get in the way of basic economic logic regarding recovery from a recession. Even though they portrayed themselves as conservatives, Schilling and Carcieri bear all the markings of classical English liberals in the economic sense, fiercely opposed to unions and praising the virtues of so-called ‘free markets’ and supply-side economics. They wanted to create a business boom in the tech sector, which is non-union.

Besides the aforementioned lack of industry literacy, Carcieri and other Rhode Island officials fatally misjudged why the Massachusetts Miracle happened in the first place. In that instance, technology firms since the 1960s had been creating a diverse set of products that reaped millions. And while they did see a particular boom in the 1980s and 1990s with computer software, the vast majority of the products created were technologies used in unionized jobs, such as municipal construction or lighting devices, industries with almost-guaranteed supply-and-demand ratios as opposed to video games, which are wildly uncertain in success based on the nature of customer satisfaction.

The reality is still as John Maynard Keynes told us 80 years ago, the way to get out of a recession is by having a government spend huge amounts on public works and infrastructure projects that create long-lasting, good-paying, unionized jobs. As the workers continue to take home good paychecks over the course of years, they in turn spend their earnings on everything from houses to cars to luxury services that they could not afford previously. That was the reason President Eisenhower, as a Republican, was pro-union and opposed the anti-labor ideologies of Joseph McCarthy and Barry Goldwater. He knew then that the middle class prosperity he oversaw was dependent on organized labor serving as a balance with the controlling powers of big capital. The fact Carcieri mistakenly thought that RISD could perform the same services as MIT and Harvard and that their wildly unpopular former President John Maeda would help foster this boom is the tragically ironic icing on the cake.

LINCOLN CHAFEE
When Lincoln Chafee took the governor’s office in January 2011, the state was in a complete crisis. Municipalities were on the verge of bankruptcy. The pension system was in trouble. And when, during his campaign, he had opposed the passage of the 38 Studios deal, he was blocked from speaking at an EDC meeting and “swatted aside” by a state trooper. He left office as a very unpopular man, with then-Treasurer Gina Raimondo having bad-mouthed him both in the press and during election debates.

I was apprehensive, given my very, very vocal opposition to the deal in the campaign, including going uninvited to an EDC board meeting and being barred from entering, that I could be accused of meddling, micromanaging, interfering. There were still board members that were very- had voted in favor of this deal. The executive director and I had sparred in the course of the campaign, now he was my executive director of the EDC. I was very apprehensive about, as I said, micromanaging or meddling in this. I saw my role as to be supportive and write the checks and hope that that first game was successful… We inherited an inferno.

Now comes the release of his deposition. Of all the motley crew of big-shots and political players, he comes across as not just respectable but actually the closest thing to a hero. I do not agree with all of his policy moves while in office, including the public sector pension reform he oversaw, but it is obvious he did not care about his image, he cared about Rhode Island.

-I did get a call from Providence Equity leadership who experience in this area and shared my initial thoughts and opposition and reinforcing that.
-When you say Providence Equity leadership, is there a particular individual you spoke with?
-My classmate, Jonathan Nelson… I had expressed opposition at that point to the loan, and he said I’m in the business, this business, and you’re right about your opposition.

From day one, Chafee was educating himself about the video game industry and saw a turkey. One of the many exhibits in his deposition is a packet of news articles and analyses that he had in his campaign office, representing the level of research he was doing during a busy election season about an industry he and everyone else knew nothing about.

-Yes, these documents we came upon after the request to make sure we had given everything that we had, and just in further searching, these are the documents that reflected that further search.
-Where were they found?
-Some in my campaign office, which was not my original campaign office that I had during the campaign, but a subsequent mini closet, almost, where we store a number of items, and others were in the governor’s office.
-Okay. The mini campaign office you refer to, where is that located?
-Airport Plaza, Warwick, Rhode Island…
-Did you ask any members of your campaign staff to do any research for you into any issues which may concern this type of potential relationship with a company like 38 Studios?
-I’m sure being a team effort and this being a major item in the news and being, you know, a very, very competitive campaign everybody was involved in finding out as much as they could about all the details of this type of state investment.

In both the deposition and public statements, Curt Schilling and his lawyers have tried to blame Chafee for their failures. They claim the governor’s press statements were the kind of bad publicity that drove away potential investors and ultimately caused the company’s failure. In the deposition, Schilling’s lawyer Michael Sarli repeatedly tries to pigeonhole Chafee and make him seem incompetent, a poor chair of the EDC board that was asleep at the wheel. The question, rephrased and repeated time and again, is contemptuous of the Governor’s office, to the point Max Wistow, the lawyer Chafee hired to represent the EDC and launch the current lawsuit, says “The gentleman is the governor. It is being abusive and argumentative.”

Regardless of how one feels about Chafee, every Rhode Islander should understand that Wistow is not standing up just for one man, he is defending the integrity of the state itself, which Schilling is trying to drag through the gutter. Chafee had no ability to impact the company’s success or failure after taking office. What killed 38 Studios was inherent to Schilling’s management style, the nature of the video game industry, and the economic impact of the 2008 crash. They failed to sell enough copies of their first game because it was a mediocre title and people were tightening their belts due to the recession.

GINA RAIMONDO
The deposition of Gina Raimondo is a one that occupies a unique time and place, having been taken on September 11, 2014, two days after she had won the Democratic primary, but before she won the gubernatorial race and ceased her duties as treasurer. Having emerged from the private sector as a venture capitalist prior to entering politics in 2011, she had a particular level of insight on the issue when news of the 38 Studios deal first broke.

-Well, as a professional in the field of venture capital, did the idea that the state was looking to enter into some sort of an agreement with 38 Studios pique your professional interest at all?
-Yes.
-Did you do anything in follow-up to having that curiosity?
-I did. I wrote that e-mail to Keith Stokes suggesting that, in my opinion, it was a high-risk venture, and if I could — since I had expertise in investing, if I could be of any help, I was here to help.

Raimondo was in the minority of those who expressed concern about the deal after she talked about the issue with her co-workers, who had a history of financing video game firms and did some research on 38 Studios. Before the company moved to Rhode Island, it was based in an area with a high concentration of gaming developers and the venture capital firms that traditionally finance their efforts.

-Okay. So, at least at the time you had knowledge that there were people that you regarded as experts in the gaming business that had decided not to invest and had looked at 38 Studios specifically, fair?
-Yes. Yes. The nature of the way this happens in general is, you know, Monday morning, you have investment committee meetings. You sit around at a table like this, you say, Sean, what do you think — Sean was my partner, who is a… gaming expert, what do you think of this 38 Studios deal? It’s casual chitchat. And so I don’t remember doing that, but the nature of it, the conversation would have been, in the vernacular it’s called shopped, the deal has been shopped around. I don’t remember him saying it, but I’m thinking reading this, he probably said, oh, that’s been shopped all over the place, and everyone’s passed… I didn’t know anything, really, about the deal or anything other than what I read in the paper, but it’s just the general concept that he was a famous baseball player in a really hot area of gaming in the venture capital mecca of America, and if he couldn’t get venture capital money and had to come to the State of Rhode Island for money, hit the pause button. Like, I didn’t know anything just from the outside looking in, if you’re a famous guy in the hottest area of gaming in the hot venture capital market in the world, and you can’t get funded,… what does the State of Rhode Island know that the whole rest of the world doesn’t know? So it was just a general concept of hold your horses.

It is possible that Raimondo will be able to use quotes like this to her advantage in the future. She is on the public record regarding how she said from the outset that this was a bad deal. But as one reads further on in the transcripts, a troubling image emerges. It becomes absolutely clear that this is a cunning and ruthless politician that will sacrifice anyone to get ahead in a political contest. Consider her treatment of Chafee in May of 2012:

-I’m going to direct your attention to the part of this document that follows the header, “A company doesn’t run out of money overnight.” Do you see that
-Yes.
-And there’s a quote attributed to you in this document and it says… ”To me the much bigger question is what’s been happening over the past 17 months.”… ”General Treasurer Gina Raimondo said in an interview on the Dan Yorke show on Wednesday… “How has the governor and his staff in his capacity as chair of the EDC board been monitoring this investment? A company does not run out of money overnight.”… Would you expect that there would be, on a deal like this, when you talk about monitoring the deal, when you use that word, does that mean that at some point the board of EDC is given information as to how this risky loan is performing?
-I have no idea… I do not know, even as I sit here, how the governance of the EDC, I don’t know the ins and outs of how the governance of the EDC works… I don’t know what information the board is supposed to see, Governor sees, counsel sees, executive director sees, I have no idea.

Ergo, she has no idea what she is talking about but does not mind dragging Chafee through the mud to score a political point. That sort of realpolitik is sadly part and parcel of a political system that traffics in media hype rather than actual ideological standards, treating the contestants as rock stars as opposed to political thinkers. Consider Raimondo’s comments about her own education in law, a point emphasized by her political campaigns.

-Okay. If you recall back to those days at Yale when you were in Evidence class, do you remember past recollection recorded?
-I never took Evidence. Don’t you know they don’t actually teach law at Yale?
-What do they teach, networking?
-Pretty much, yeah.

How encouraging.

Raimondo’s private sector line of work is bitterly referred to as ‘vulture capitalism’ by those who have run afoul of people in her line of work. There are success stories, such as when Facebook went from a college start-up to a multi-million dollar company. But there are thousands of shattered dreams and broken lives also, far more than the successes. She has already set her Wall Street cronies loose on the public sector employee pension system. The fact she even allowed PawSox owner Larry Lucchino to entertain the idea of a taxpayer-financed stadium this summer despite economic analyses forecasting doom shows us this is a person who would not blink an eye while selling out her voters as long as she can curry favors. Carcieri may have been foolish and Chafee swamped, but Raimondo is someone who knows how to get ahead regardless of the consequences as long as she can benefit.

LESSONS LEARNED?
There are lessons to be learned from this mess. It may turn out in all probability that Superior Court Judge Michael Silverstein finds for the defendants and rules that the State was not conned by Schilling, they merely made a very bad financial decision. With the disclosure about Chafee’s friend Mr. Nelson and Raimondo’s warnings from the private sector, it seems clear that there was a reasonable level of insight about Schilling and in fact the politicians just let their egos get ahead of them.

But the type of reform really needed goes well beyond political parties and into the realm of revising our basic norms of government. 38 Studios is not an aberration, it is symptomatic of something deeply embedded in the corruption of Rhode Island’s political culture. The one who was the voice of reason and sanity ended up as a reviled one-term politician, now walking a Quixotic trail towards the Presidential primaries with little support or media hype. The majority of the culprits in this rip-off are going to probably get off scot-free. And the type of people that create these kinds of economic nightmares now have one of their own in power, biding her time and eyeing advancement to Washington DC.

Karl Marx, the prophet who told us capital is a system of contradictions leading towards deeper and wider economic disparity, famously told us “Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.” Unfortunately, the joke is on us.

Q. And would you consider it to have been, and if you can’t answer this question, it’s not the greatest question, but would you consider it to have been, the crisis, to be on the same level as the DEPCO crisis?
A. Well, I don’t know if you can make the comparison because DEPCO had to do with the Rhode Island banks, where the closing of the institutions by Governor Sundlun affected many people individually. This crisis was people were out of work, which would impact a family directly. So I mean, you know, at different periods of time, it seems like every 10 years, you know, there’s a problem.
Q. Sure. If you were to compare the problem, let’s call it, of 38 Studios, with the, what we know now is a bad $75 million loan, if you were to compare that to in terms of negative effect to the State of Rhode Island as compared to the DEPCO crisis, are they in any way comparable? –Deposition of former Speaker William Murphy

Former Speaker Murphy’s deposition is a case study of a witness hedging his bets. Almost every single answer is couched in a variation of the qualifier ‘to the best of my knowledge’. It is clear in reading his testimony that he is playing a careful game and wants to be certain that he does not create an opening for any future litigation. To illustrate this point, one must only look to page 7, when asked about the date of his last day as Speaker, he replies “To the best of my knowledge, February 11, 2010”!

He also is careful in how he is answering questions about Gordon Fox, who was his client on August 24, 2014, the date of his deposition. A great deal of information about Fox is claimed privileged under the attorney-client relationship and a good deal more by his qualifying statements. His testimony about the infamous March 6, 2010 fundraiser is revealing in its lack of disclosure, never mentioning Fox or Corso.

-Were you present at that party?
-At the World War II fundraiser for the Band of Brothers, yes, I did go to Mr. Schilling’s house with my wife.
-And did you see Mr. Schilling that day?
-I did.
-And did you speak with Mr. Schilling that day?
-Hi, how are you, thanks for inviting us.
-Did you have any conversation with him about 38 Studios that day?
-No.
-Did you see the Governor at that gathering?
-Yes, I did.
-Did you speak with the Governor at that gathering?
-Yes.
-Did your conversation include any discussions about 38 Studios?
-No.
-Were you present when the Governor had any conversations with Mr. Schilling at that gathering?
-To the best of my knowledge, no, other than seeing the Governor there.
-Do you have any knowledge of whether Mr. Schilling and Governor Carcieri spoke about 38 Studios at that gathering?
-I do not.

Murphy also does not mention Nicholas Mattiello, his protege and friend, who is now Speaker of the House.

The deposition includes two points that are worth noting. First, Murphy was asked by Schilling to introduce him to the Massachusetts Speaker:

-I did arrange a, if you want to call it a meet and greet or an introduction with Curt Shilling with the Massachusetts Speaker at the time.
-And who approached you to arrange that?
-To the best of my recollection that would have been Thomas Zaccagnino and maybe Mr. Schilling.
-And why couldn’t Curt Shilling in that he has a very strong reputation in Boston as a pitcher involved in the first World Series with the bloody sock, et cetera, why couldn’t he make his own introduction? Why did he need to come to you?
-That’s a better question for Mr. Schilling.

Then comes talk of Murphy’s tour of the Massachusetts 38 Studios offices. This moment is key. For years, it was thought that the first time someone who worked with 38 Studios met with a Rhode Island official was the March fundraiser, but this summer it was a big news disclosure to learn Murphy had been to the offices prior to that date.

I was asked at some point if I wanted to, you know, come and tour the facility. And I have to say back in the fall of 2009, I’ve been a Red Sox fan all my life. Mr. Schilling was a Red Sox nation hero. And the opportunity to see a mill development that was, you know, put back on the tax rolls, like we had historic credits here in Rhode Island where mills were put back on, created apartments, businesses, et cetera, I thought it would be a good thing to see, and at one point in the fall of 2009 I took a tour of 38 Studios.

Speaking of local journalism … thank heavens for the local debates so we can hear the candidates actually discuss the issues that we should be making our decisions on. Both networks deserve credit for their investment in these commercial drains. Last night WJAR hosted all three CD1 candidates and it made for a much better conversation on the issues than the false narrative of only two viewpoints that the WPRI debates fostered. You can watch the whole thing here if you missed it or read the ProJo’s account here.

Their back and forth on energy policy, I think, is interesting to note: Doherty’s idea is to drill baby drill, a disastrous idea from an environmental perspective.Everyone short of Sarah Palin and Dick Cheney pretty much agreed on this until we started realizing how poor we are back in 2008/09.

Cicilline, on the other hand, had a much more nuanced approach that doesn’t make for as a good as sound byte. He spoke of a bill he introduced that would better regulate Wall Street trading of oil. After all, it isn’t supply, which is down, that is driving up the price of oil, it’s quite literally the stock market’s need to maximize money-making on all trad-able commodities. More drilling would serve Big Oil and Wall Street  more than the consumer. More regulation would serve the consumer more than Big Oil and Wall Street.

In a nutshell, that’s the big policy difference between Doherty and Cicilline: the Doherty, whether he even understands this or not, would serve the 1 percent while Cicilline would represent the rest of us.

Speaking of the Cicilline Doherty campaign, and local media bias … the entire Democratic party came together to call out Brendan “Uncommon Integrity” Doherty for his historically negative and misleading campaign. And it hardly got covered at all. This is actually a very important component of what voters should know about Brendan Doherty, who is asking us to trust that he won’t be a shill for the GOP if we elect him to Congress … but what we know of his campaign is that he represents himself differently from how he behaves. If local political reporters truly believe it is part of their jobs to call balls and strikes, they should be doing so on this issue.

Aaron Regunberg writes an excellent piece in GoLocal today about Gordon Fox’s come-to-progressive awakening this campaign season. Here’s the comment Regunberg, one of the best local opinion writers and thinkers around, made on my Gordon Fox endorsement. By the way, read all the comments to see how disappointed some RI Future readers are with my supporting Gordon Fox over Mark Binder…

Narragansett Patch has a fun story about a recently-returned Charlie-O’s flag that was stolen from the popular bar with URI students, mysteriously enough, during my days as an undergrad and Charlie O’s patron… (Sorry Steve Greenwell – some mysteries are better left unsolved…)

Speaking of URI, the Rhody Rams mens hoops team opens its exhibition season against the Coast Guard Academy tonight in the Keaney Closet. Being the biggest publicly-financed sports team in the state, the URI Rams are, in my humble opinion, the official athletic squad of the local progressive community!

And speaking of sports … we’re suing Curt Schilling. I’m glad from an informational perspective and it’s certainly necessary from a legal liability point of view, but I’m also worried this whole thing ends with Big Schill putting some sort of Ruthian hex on the Ocean State.

The undisclosed risks included the express admission, made by 38 Studios’ directors and chief executives directly to these Advisors, and by 38 Studios’ own financial projections that were disclosed to the Advisors, that, even with the loan from the EDC, 38 Studios was undercapitalized by many millions of dollars and would not have nearly enough money to relocate to Rhode Island and complete Copernicus, and that, as a result of this cash shortfall, 38 Studios was likely to run out of money in 2012. The EDC Board understood that 38 Studios’ capital requirements to complete Copernicus were approximately $75 million, and that the net proceeds to be lent to 38 Studios would be less than $75 million.  Nevertheless, the EDC Board was also told that the net proceeds 38 Studios would receive, along with other sources of funds set forth in 38 Studios’ financial projections, “would provide necessary financing to relocate 38 Studios to Rhode Island, complete production of Copernicus, and capitalize the company’s growth and expansion in Rhode Island.” In fact, the Advisors knew or should have known that this was untrue, and that even if all of 38 Studios’ financial projections proved true, the net proceeds would not be sufficient to fund 38 Studios’ relocation to Rhode Island and completion of Copernicus.

According to the complaint, the deal was put together against the advice of lower-level EDC staff, according to projections that guaranteed failure by last summer, pretty much exactly what happened.  The complaint also points out all the ways in which the EDC top brass and the deal-makers prevented the EDC board from hearing data to contradict them.  The complaint says the EDC analyst who threw cold water on the proposal was un-asked to prepare his economic analysis, the agendas were manipulated to keep damaging information out of board discussions (most famously by preventing then-candidate Lincoln Chafee from speaking to it, but there are other incidents in the complaint).

So we learn that Governor Chafee was not the cause that sent 38 down the drain.  The cause was wishful thinking by powerful people, who thought that ignoring the lowly analysts was the right thing to do.  By 38 Studios own projections, $75 million wasn’t going to be enough to do the job, and when they found out they weren’t even going to get that much, due to deductions for debt reserve funds, they forged ahead anyway.

The complaint is, of course, just that: a complaint, a set of allegations.  The facts in it remain to be proven, but it seems possible there will be a trial to come out of it.  If so, it will be a spectacular look at how deals are made around here and how illusions of good times ahead can drive sensible people to do silly things.  Having looked at the complaint, I have no doubt that the misfeasance alleged in it was motivated by a desire to see something cool happen for Rhode Island.  (Well, most of it, anyway.)   But purity of motive is no excuse for sloppiness of analysis, a message that is as applicable to debates about polls, climate change, economics, or business projections for a video game company.  It’s a real world out there, and real numbers have a way of biting you in tender parts when you ignore them.

Speaking of firsts, the first offshore wind farm in the United States, which should generate enough electricity to power almost 20,000 homes, could be built off Block Island by 2014, says the Providence Journal. If you’re worried about the five, 600-foot-tall turbines effect on the environment, this is what the ProJo says the project will do to keep things cozy for wildlife:

“During construction, Deepwater would use a spotter boat and would suspend work if [endangered North American right] whales get too close. The company would do above-water pile driving to reduce underwater noise when the turbines’ foundations are being anchored to the ocean bottom.”

There could be another civil liberties controversy brewing in Cranston, as Senate candidate Sean Gately is now making an issue out of the school department’s decision not to let the Cub Scouts recruit new members on school property.

Better late than never, the ProJo editorial team runs a post mortem on the 38 Studios debacle, laying the most blame on Don Carcieri and the least on Linc Chafee … meanwhile Curt Schilling will get the worst of it tonight on ESPN as he’ll be featured in a documentary about athlete’s who go broke.

The biggest chain of weekly newspapers in Rhode Island has a new publisher and she is doing something a journalist should never do, namely saying things that are patently untrue: “Our position in our markets is definitely positive as we continue to be the dominant news source for our communities,” Jody Boucher told Ted Nesi in an email. No they aren’t. In fact in almost every community Southern Rhode Island Newspapers has weekly papers in, their properties are a distant second to Patch sites.

Speaking of which, Patch is taking on the Valley Breeze now, too.

Today in 1800, Nat Turner, one of America’s greatest revolutionaries, is born.

Thanks to WPRI.com reporter Ted Nesi’s Twitter pontifications, we’ve learned from Boston Magazine‘s Jason Schwartz that 38 Studios had planned to release their flagship game (codenamed “Project Copernicus“) under the “freemium” model of gaming (a portmanteau of “free” and “premium”, referring to the dual use of free and premium accounts, dominant in tech-savvy South Korea). It’s a bit like the razor blade model of business; send out the initial product for free, hook the customer, and then charges for supplemental services. Essentially, in a freemium game, players can play essentially everything with a free account; you can download the game online and then play with no additional costs. However, players can buy perks or unlock additional content for actual money, giving them a leg up on other players. Massively Multiplayer Online Roleplaying Games (MMPORGs) lend themselves particularly to this kind of business model.

This was actually a smart business move for 38 Studios. OnlyWorld of Warcraft can maintain a subscription model, mainly because they operate as the Facebook of online games; people play because their friends are there. They also benefit from the sunk cost fallacy; since players have already blown hundreds or thousands of dollars on World of Warcraft, it would be insane to stop paying and thus stop playing now. It’s a logical fallacy, but plenty of businesses profit off of it. That 38 Studios had managed to convince Curt Schilling to come around to the free-to-play model shows a willingness to adapt to changing circumstances.

Unfortunately, learning now that it would’ve been an announcement that “shocked the world” (according to Mr. Schilling’s remarks to Mr. Schwartz) is too little too late, and adds fodder to the narrative that 38 Studios was not a well-run company (one which is indelibly created from Mr. Schwartz’s previous story on 38 Studios). I was bashing 38 Studios for relying on the subscription model back in mid-February in some of my earliest writing for RI Future. It was a bad model in 2010, when the deal that moved 38 Studios to Rhode Island was started. Had 38 Studios announced that they were intending a freemium-type game much earlier (say, at any time before the company missed payroll), it could’ve given them serious boost. Plenty of projects continue on the basis of fan goodwill (plus, fanboys = identified market, which investors like to hear about).

An example of that is the venerable MechWarrior/BattleTech series of games. Beginning in 1984 as a board game, MechWarrior was the video game series, which had a great hit with 1995’s MechWarrior 2 (a personal favorite of mine), but ultimately the developer shut down in 2007 after subsequent games failed. Its founder is working with a new developer to create MechWarrior Online. It’s a free-to-play game already in its Open Beta stage of development (anyone can pay to help test the game while it’s be developed ahead of its planned release).

All of this is to miss another point I’ve made before: nothing was pointing to any great innovation on the part of Project Copernicus. In fact, that this would be the first triple-A release that was free-to-play would’ve been the first signal that 38 Studios was actually bringing something unique to a market crowded with same-samey games. But what we were getting about Copernicus is that it was essentially like Kingdoms of Amalur, a relatively old-hat type of game. In fact, World of Warcraft wasn’t particularly unique. It simply followed Apple’s model of development; rely on your dedicated fan base from other products to purchase your item and generate good buzz, let the innovators go out and do their thing, then do what they did, but better.

To compete in the online gaming arena, you need something new. The Belarusian company Wargaming.net has provided that with World of Tanks and done exceedingly well. Having played the game, it’s a incredibly fun initial experience, though there’s a bit of frustration as more skilled people turn your fun tank into Swiss cheese (I’m understating, more than once I’ve had to quit the game to let my anger over how much I suck at it subside). Wargaming.net is spinning the game off into World of Warships and World of Warplanes.

Alternatively, if new doesn’t float your boat, open is a good idea as well. Paradox Interactive is an example of a gaming company which doesn’t keep its cool stuff under its hat (they’ve recently announced they’re starting on the fourth version of Europe Universalis, their flagship game which launched the “grand strategy” genre of computer games). They’re always giving more information to fans about their games, via developer diaries with insight into the process and features, and also by fostering a lively forum community.

38 Studios seemed to neglect this strategy. What did we know about Copernicus? Not much. Perhaps Kingdoms of Amalur was to be its predecessor and tie into the world. In the end, we didn’t even know its actual name.

So yes, free-to-play was an intelligent decision for 38 Studios. It’s a shame that we’re learning it now. But Governor Lincoln Chafee didn’t mess the company up, the people tasked with running it did. Had free-to-play been announced as 38 Studios was facing bankruptcy it would’ve looked desperate. It needed to be sold that way from the start. Of course, hindsight is 20/20, but then I was saying this stuff two years ago (just not publicly on the Internet). And I still standby what the majority of Rhode Islanders believed at the time, that this deal should not have been made.

Note: I’ve used “free-to-play” and “freemium” interchangeably here. Technically, that’s not exactly correct, one relies on ads and/or micro-transactions to generate profit, the other relies on paid accounts and occasionally ads and micro-transactions to turn a profit. However, they’re near enough as to make no difference here, and many of the games I mentioned use them interchangeably as well when describing their own games.

The most recent example (which you learned about first from RI Future), a cross that a car wash owner put on a strip of city-owned land that he has long taken care of, is an interesting example: is it a religious symbol, a memorial or an act of protest? The business owner, Peter Montaquila, told WPRO yesterday he put it up to stand in solidarity with the Woonsocket Cross, also a less-than-Constitutionally-clear case.

But issues of legality are relatively easy to sort out … the danger is that the non-legal battle lines are being drawn in the sand – and the situation is getting tense. Montaquila, like the owner of the flower shop who refused to deliver a bouquet to Jessica Ahlquist when she won her case against a religious symbol in Cranston West High School, said he doesn’t want to do business with those who don’t agree with him on this issue. Could we start seeing signs in business windows: “We don’t serve atheists.”

Politicians, like Rep. John McLaughlin of Central Falls, and shock jocks like John DePetro, are fanning the flames with angry rhetoric against those who see a line between church and state.  Their colleagues should call them out and implore them to be leaders rather than instigators.

People take both their religion and their Constitution protections very, very seriously and this is the third such nasty fight over the nexus of the two in a year here in Rhode Island. Someone should step and act like a leader before something really ugly happens.

Speaking of John DePetro, he is inviting some interesting karma picking on Gov. Chafee’s 18-year-old son for having a party … the mean-spirited talk show host could find himself in a similar situation someday…

Don’t believe a word Curt Schilling says about Gov. Chafee’s public comments about solvency crippling the company … the Associated Press reports that 38 Studios was already considering bankruptcy by the time the story went public.

AP reporter Laura Crimaldi obtained the confidential documents that led to this very telling development. Unfortunately for Rhode Island, today is her last day with the Providence bureau as she is moving on to a job with Boston Globe … what a way to go out Laura and best of luck in Beantown!

Speaking of great local reporting … no one covered the local effects and reactions to the Supreme Court’s decision on the Affordable Care Act better than Ted Nesi yesterday (check out his blog for a variety of different stories). We pick on Ted often because of the pro-business/pro-establishment bias he sometimes displays, but it’s also well-worth pointing out that he is far and away the most talented journalist covering the Ocean State.

One more note about local reporting … here is Kathy Gregg’s lede from her story yesterday on campaigns for seats in the State House: “How many Rhode Island lawmakers will return to the State House next year without having to face an opponent? The answer is: very few.”  And here is the lede on her story today: “One out of five General Assembly incumbents is running unopposed.”

Is 20 percent “very few”? On the contrary, we think it’s a great many. Perhaps the Projo can report this yet another way tomorrow…

So, to make a long and politically complicated story short, three Woonsocket legislators hold the financial fate of the city in their hands – and there is nothing Mayor Leo Fontaine, the city council, the budget commission or to some degree even the governor can do about it … unless the House decides to vote for the tax over the objection of Reps. Lisa Baldelli-Hunt and Jon Brien.

Speaking of Woonsocket, Bill Sequino is an excellent choice to serve as chair of the budget commission … He’s the longest serving municipal manager in the state and knows the budget process backwards and forwards. East Greenwich, where he has served for more than 20 years, may be known as a haven of conservatism but its local pols actually spend public money like drunken sailors (EG is again raising property taxes this year to help pay off debt service on huge spending projects) and then look to Sequino and his staff to make it all work.

Interestingly enough, Sequino’s former adversary on the town council, Vince Bradley, is now serving on the West Warwick School Committee, reports EG Patch.

No wonder Curt Schilling’s $75 million loan guarantee was so easily approved by the EDC – he was doing business with one of the board members who voted in favor of the deal. The Projo reports this morning that when the EDC was voting on the Schilling deal, the ex-Red Sox was also developing board games for Hasbro, whose chairman of the board Al Verrecchia was one of the EDC board members who voted for the deal. Verrecchia is also a good friend and close ally of former Gov. Don Carcieri.

The Patriot Ledger takes RI to the proverbial woodshed for the 38 Studios deal.

Ian Donnis on the efforts to reform payday lending.

It was a bad day for organized labor across the country … not only did Wisc. Gov. Scott Walker survive the recall election waged against him, two California cities voted to cut pension benefits to public sector retirees.

The good news coming out of Wisconsin: Democrats regained control of the state senate.

This morning, former Red Sox Pitcher Curt Schilling blamed the State of Rhode Island for the failure of his video game company. According to the Providence Journal, he blamed the state for not giving him more tax breaks. Additionally, the Journal reported, Schilling has lost “33 pounds in the past 45 days, which he calls a ‘surreal’ stretch.'”

What follows is an exercise in satire….

The State of Rhode Island is pleased to announce the creation of a new state-sponsored video game company, “Thirsty-Ate Studios.”

“After years of complaining about job creation and fiscal woes,” said Governor Lincoln Chafee, “we are finally investing tax payer dollars in something valuable—pixels!”

The new Massive Multiplayer Online game, which is based on the State’s trademarked “Little Rhody Corruption System,” (patent pending) offers every Rhode Islander a chance to earn as good a wage as a World of Warcraft gold farmer in China.

“Now, we can finally say that we are educating our children for the jobs of the future,” said Education Commissioner Deborah Gist. “Video game playing is profitable, and we’re going to be rolling out a new curriculum in the fall teaching every student that video game playing, like reading, is hard work. Of course there will be rigorous testing conducted every three days just to make sure that our teachers are doing their jobs.”

The Department of Education will be purchasing thousands of used and obsolete video game consoles at full price from the Extraordinary Rendition training division of Halliburton, a security company owned by former Vice President Dick Cheney.

According to former EDC director Keith Stokes, the new official state video game will be named, “No Reckoning—Escape from Responsibility.”

“Each player will become an elected official, whose goal will be to collect special interest funding and distribute perks, no-show jobs, and state contracts,” Stokes said. “Bonus points can be earned by making random speeches in ‘obfuscation’ mode and by kissing babies.”

The game will include the following stand-alone App modules:

• Legislative Blockus: Senators and representatives vie to stall important bills from coming to the floor, and then force them through a vote at the last moment with as many hidden clauses as possible.
• The Ferdinand St. Germain Running of the Pork: Intrepid politicians chase lobbyists in the shape of greased pigs through State House halls in search of a payoff.
• The Ed DiPrete Dumpster Diving: where contestants search through trash bins for bags of cash.
• The Vincent “Buddy” Cianci Pentathalon: including a burning log roll, marinara cook-off, creepy crony collection contest, RICO smackdown, and finally a free-for-all radio talk show comedy slam.
• The David Cicilline Pass the Buck: A digital version of hot political potato. Whoever is the mayor when the timer goes off loses all credibility points.
• The Joe Mollicone Bank Run: Get all your money out of the country before the credit unions collapse.
• The Joseph Paolino Real Estate Swap: Like Monopoly. Collect as much property as you can in downtown. Keep it unoccupied so that the property taxes stay low. Wait until the government knocks down the highway to make it “prime waterfront” then collect your payoff.
• The Donald Carcieri Ostrich Hide and Seek: You play a large preening flightless bird. Sqwaack loudly and give away millions of taxpayer dollars while complaining that poor people aren’t doing their fair share. Then bury your head in the sand and don’t say a peep. Maybe no one will notice.

While many of these modules are still in development, one current favorite is the Department of Motor Vehicle Paperwork Maze. Find your way to the only open office, get in line to get a number, and then see how many bureaucrats it takes before you are allowed to leave. There is no time limit.

“I’m really keen on that one,” said Governor Chafee. “Of course I usually ride my horse or get a lift in my chauffeured limo, but if I ever went to a bar and they asked me for my driver’s license, it would be a bit embarrassing to say that I never got one.”

In related news, former Red Sox Pitcher Curt Schilling has hit number one with his new bestseller, “How to Win the World Series, Bilk the Government for Millions, and Lose 33 pounds in 45 days.”

Mark Binder is an author and professional liar. His latest novella, “The Buddha Who Wore Keds” is available for Kindle at: http://amzn.to/buddha_kindle

And, finally, an editorial on 38 Studios from the ProJo.

It seems as if smaller companies that received small loan guarantees from the state are faring much better than did 38 Studios and its huge $75 million loan guarantee, reports PBN.

Meanwhile, the spat between Gov. Chafee and Gina Raimondo continued on Friday with Chafee telling me Raimondo was the only general officer not to make it to a briefing on 38 Studios. Joy Fox, a spokesperson for Raimondo, told Ted Nesi that the treasurer didn’t know about the meeting but a spokesperson for the governor said she worked with Raimondo’s office on scheduling the meeting.

Not confident the General Assembly will approve a supplemental tax increase, the Woonsocket City Council asked the state to appoint a budget commission on Sunday night … something tells us this story is about to make much bigger headlines. Stay tuned.

John Kerry’s controversial yacht was back in Newport recently, according to the Boston Herald … but no word on whether Rhode Island gave the Massachusetts senator a loan guarantee to dock it here.

Picking up on Tom Sgouros’ theme from last week that conservatives aren’t necessarily fiscally responsible, Paul Krugman calls Mitt Romney, Paul Ryan and Chris Christie “fake deficit hawks.”