Guest MINDSETTER™ Dr. Edward Mazze: 10 Questions for 38 Studios

Guest MINDSETTER™ Dr. Edward Mazze: 10 Questions for 38 Studios

Before additional public funds are awarded to 38 Studios, the Board of the Economic Development Corporation (EDC) must require the company to answer several questions Answers to these questions should have been obtained before awarding the funds, during the time the funds were distributed, when and if the company was being monitored, and, last week when there was a discussion of the company’s future and the use of tax credits from the Motion Picture Production Tax Credit program.

Questions

• Does the company’s board and management have the qualifications and experience for the challenges they face?
• How has the company addressed the risks and uncertainties that could lead to failure?
• What is the company’s short and long term strategy, namely, its business model?
• If there is a Board of Directors, what is its role in the company’s strategic planning?
• What happens if Schilling is no longer part of the company?
• Who are the other investors in the company?
• What is the company’s projected sales and earnings for the next several years?
• What debts does the company have outstanding beyond the $75 million loan from Rhode Island?
• What is the current value of the company’s assets, and how was the value determined?
• How does the company plan to communicate financial and business information in a timely manner to its stakeholders, including Rhode Island taxpayers?

 

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EDC directors have a duty of loyalty, a duty of care and a duty of fiduciary responsibility in making decisions regarding the use of taxpayer funds for 38 Studios. If the directors are unable to answer all or most of these questions today, then it is their responsibility to get the answers and share them with the taxpayers now.

Dr. Edward M. Mazze is a Distinguished University Professor of Business Administration at the University of Rhode Island.