These days even millions of dollars in sports money isn't enough to keep a company afloat, just ask former Boston Red Sox pitcher Curt Schilling. His video game production company, 38 Studios laid off all 300 employees earlier this year, and filed for bankruptcy.
If that's not bad enough, the state of Rhode Island's Economic Development Corporation had invested 75 million dollars in the studio in an effort to bring jobs and tax dollars to the Ocean State.
Schilling struck out, but he's not alone. Big business promises are broken all over the country. Including right here in Texoma.
Sean Stockard is the President and CEO of the Business Development Corporation of Vernon. He said, "When these things happen here, it hits home and it hurts and I don't mean to make light of it or stuff it off, but these things happen every day all over the United States. Deals go bad."
Stockard sat down with Newschannel 6 to talk about a big business promise broken in Texoma: Tangarie Alternative Power. "We offered them $865,000 in incentive money in the form of a forgivable loan if they would come to Vernon and they agreed to create 93 jobs in 3 years."
After creating a mere 15 jobs, Tangarie shut down production. The $865,000 loan came from the state of Texas. Stockard pointed out, while the loss of money is tragic, its money they would have forgiven and paid back to the state by themselves, if Tangarie created the jobs it promised.
Stockard stressed, "What we're missing, what we're losing out on is the 100 jobs we wanted to create... When tangerine came to town they had with them what we believed to be their production manager their financial manager and their marketing manager. They had all the pieces in place. It passed the sniff test if you will and it seemed like a sound investment."
The smell turned sour when the company officially moved in, without bringing those key people to town. That mistake is not lost on Stockard. "If we made a mistake somewhere along the line if there was an error on our part, if I could go back and do something different we would have tied our incentives to the entire team coming to Vernon."
Since Tangarie's failure, Vernon's BDC does tie new incentives to the people who will actually be on the ground for day to day operations. "We haven't just washed our hands of this Tangarie thing said its a loss, better luck next time we're setting things in motion now that we hope will recoup that fund."
One way Vernon will try to earn back some of its losses is by holding an auction of the remaining inventory at Tangarie. The Vernon BDC will meet on July 25th to finalize the details of that auction.
As in Vernon, and all over the country, economic development in Wichita Falls is a gamble.
Executive Vice President of Economic Development for the Wichita Falls Chamber of Commerce Kevin Pearson said, "Everyone at the city, the county on the 4A board, MSU, Vernon College, Workforce Solutions, all work very, very closely with the company to make sure that we can do what we say we're going to do. At the same time we want to make sure the company can do what it says its going to do."
In 2009, the Wichita Falls chamber of commerce offered nearly 8 million dollars in incentives to mattress manufacturer Natura World. "If I told you the number of hours that were spent making Natura happen and all of the people who were involved in that... it was staggering and we wouldn't have done that unless we thought it was a good deal."
Two years later the company temporarily closed its doors, doors that are yet to reopen. I asked Pearson if he believes they took too great a risk. "I would say no, absolutely not. We felt the risk was acceptable given the collateral position we were put in, given the clawbacks that we had discussed and what we knew about the economy at that point in time, no we did not. We didn't have a crystal ball back in 2009."
The Chamber made sure provisions were in place in case Natura did fail and it's those security provisions that are keeping this case far from settled. Many of the details remain a mystery to residents because of a non-disclosure agreement between the company and the Chamber.
But not every business in north Texas goes belly-up. Tryer Process Equipment makes parts for oil and gas drilling facilities. Three times they've applied for funding from the Wichita falls 4A tax board to create jobs. So far they've fulfilled every job they promised to create, and are well on their way to fulfilling the next bunch.
Pearson said, "I like to define economic development as the process of doing things that most people think just happen. Out of the blue you hear there's a new company coming to town and nobody really understands, except for a core group of players within the community, nobody else knows how much time effort and work went into making that deal happen."
Pearson and Stockard both pointed to other companies in their respective areas that have created jobs, boosted the economy and survived. But right now, the looming decisions about Natura World and Tangarie seem to overshadow any small successes.