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Boston Capital

Curt Schilling’s cash and credibility crisis

The photo looked like a snap from the glory days: Retired Red Sox great Curt Schilling surrounded by a swarm of reporters pressing in close with notebooks and cameras.

But there was nothing glorious about the scene this week, when Schilling met with Rhode Island economic officials scrambling to keep his 38 Studios computer gaming company afloat.

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Those state officials were already on the hook for $75 million in business loan guarantees — one of the great bonehead economic development deals of recent history — and publicly questioning whether additional aid Schilling is seeking would amount to throwing good money after bad.

The idea of government officials using public money to prop up private enterprise drives a lot of people nuts, and I agree with them most of the time.

But what would Curt Schilling think? I’m not talking about the executive with a cup in his hand. What about the famous public figure with well-known views about politics and personal responsibility?

Schilling is a self-described conservative with a disdain for big government, which he considers intrusive and overbearing. He is a big believer in people helping themselves and solving their own problems.

A couple of lines from an old post on Schilling’s blog, 38 pitches, sums it up:

“If a conservative is down-and-out, he thinks about how to better his situation.

“A liberal wonders who is going to take care of him.”

Now Schilling is back with his hand out at a time when Rhode Island is dealing with double-digit unemployment and an economy so bad that many of its communities are in grave financial trouble. State officials are facing bigger problems than Schilling’s 38 Studios.

How does that square? Simple: It doesn’t.

Schilling and his company may have Rhode Island officials over a barrel but 38 Studios shouldn’t be their problem to solve. That would turn a poor decision into a disaster.

As bad as this picture looks, it’s important to point out some important details I don’t know. For starters, it’s not clear exactly how serious problems are at 38 Studios. Schilling asked Rhode Island officials for more aid this week, but no one has publicly explained how much or what form that assistance might take.

It also remained unclear what kind of money Schilling and other investors might have put up to help keep the software company afloat.

In the past, Schilling has described how he invested more than $30 million of his own money in the company. I don’t doubt that represents a big chunk of his personal worth.

Schilling moved his company from Massachusetts to Rhode Island in 2010 when that state offered to back him with $75 million in loan guarantees. The goal was to create jobs in Rhode Island and 38 Studios has hundreds of employees on its payroll.

The deal was a shocker because it was so rich and committed so much of the state’s available resources to a single venture. The economic program backing 38 Studios could only extend a total of $125 million to all companies involved. Massachusetts officials looked at the deal and knew there was no way they could — or should — try to match it.

State officials who back young, developing companies with big money are almost always making an expensive mistake. They see big objectives — reviving employment or fostering new industries — but don’t have any business or the necessary skills to pick individual companies to support. Public money is better spent creating infrastructure and other common resources to attract business and industry.

But Rhode Island is hardly the only state to make that mistake. No one in Massachusetts should forget Evergreen Solar Inc., which won $58 million in commitments from Governor Deval Patrick before closing up shop in Devens. A123 Systems, the Watertown battery company that received huge incentives to build a factory in Michigan, is facing business problems so serious it hired financial advisers this week.

No one should blame Schilling for taking Rhode Island up on its original generous offer. It was a great business deal and he took it. Who wouldn’t?

What happens next is another story and it is still unfolding. Incredibly, the state on Thursday returned a check from 38 Studios for $1.1 million owed because the company didn’t have the money to cover it.

Everyone should hope Curt Schilling and 38 Studios find a way to pull through. He shouldn't expect government — and taxpayer money — to provide the solution.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
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