So Where did all the Money Go?

A question that comes up pretty frequently is how 38 Studios was able to burn through the $75M loan in a little over a year. This post will serve as a little bit of an off-the-cuff math class to show how easy it is, relatively, to spend that much money.

Here's what we know for certain-

• Of the $75M total loan, about $27 million of it was set aside to cover the first 2 years of interest payments on the bond, so the actual amount 38 received was closer to $48M
• They had about 375 full-time employees between RI and MD

Here are some numbers and assumptions I'm using-

• Those 375 employees averaged about $70k in salary and about $14k in benefits annually ($7k/mo)
• The rental space of 100k square feet costs about $15/sqft per month
• The costs between their RI and MD offices are close enough for argument's sake

Using those numbers, the building cost them about $1.5M each month and total payroll cost them about $2.5M. Due to the sales of their 1st game not meeting their internal assumptions, the proceeds from 38's 1st game reportedly were only going towards paying off a previous lender, so 38 was essentially operating solely off the funds RI provided. At roughly $4M per month, it should come as no surprise they burned through the money as fast as they did.

I'm guessing the assumptions in 2010 were that Amalur would sell far more units than it did and that their next game, Copernicus, would be much closer to completion than it is. It's too bad only hindsight is 20/20.