It received $17.2 million in April 2011 after creating at least 80 jobs with a salary of at least $67,500. It was estimated the firm would hire another 45 employees by November 2011, but it reached that mark in April, as well, the EDC said, allowing it to access $4.2 million more.
The company then got $1.6 million at the start of November 2011 for creating at least an additional 125 jobs. That mark had been expected at the end of January this year.
The company also got funds when it landed a distribution deal for its game.
By the end of 2011, the firm had already spent all the money due it under the agreement — nearly $50 million, an audit conducted for the state by Braver PC found. The rest of the money was kept in reserve accounts.
The EDC has hired an outside attorney to determine whether the state can recover any money from individuals or groups involved in the loan guarantee. Federal and state authorities have also launched investigations into financial transactions at 38 Studios.
Pachter, the analyst, said most gaming studios typically don't have more than 200 employees. The game 38 Studios was making might have required twice that manpower toward the end of its development, he said. But the company fell behind that schedule; Gov. Lincoln Chafee has said the game was still a year from release by the time 38 Studios filed for bankruptcy.
While the state focused on job creation targets in negotiating with 38 Studios in 2010, the EDC would much later suggest new guidelines for evaluating whether startups like 38 Studios — without any revenue — should get a loan guarantee.
Guidance issued in April, as 38 Studios' financial woes spilled into public view, calls for at least a 30 percent "co-investment"— up front — and a personal guarantee from anyone with 20 percent or more ownership in a company. Schilling had a nearly 83 percent stake in 38 Studios.
The EDC has since capped at $10 million the amount a single company can get under the "Job Creation Guaranty Program" — a common practice by states with incentive programs designed to spur job creation.
The Washington-based nonprofit Good Jobs First, which tracks state and local economic development subsidies, says Rhode Island's massive award to 38 Studios runs contrary to the idea behind such programs, which is to spread the risk around. 38 Studios got 60 percent of the $125 million available in the program.
Barry Gilbert, of Boston-based Strategy Analytics, prepared a report for the EDC in 2010 assessing the video game market and the potential benefits and risks of the deal. It noted that 38 Studios' focus on a single game, code-named Copernicus, left "little wiggle room" and was analogous to an "all-in" hand.
Gilbert said he was surprised to learn the loan guarantee program had no caps.
That seemed to stem, Gilbert said, from desperation for economic development, paired with excitement over Schilling's involvement and a belief that "38 Studios was the guy that was going to carry the torch and bring them to the top of the mount."
Erika Niedowski can be reached at http://twitter.com/eniedowski