Two more recent examples of collateral damages show that they are still occurring even today. The first was in 2009 when the city of Port St. Lucie, Florida and offered substantial incentives to the graphics art company Digital Domain to move a development lab to the area. A massive 115,000 square foot office and studio complex was constructed on the western side of Port St. Lucie and occupied by about 300 software and graphics personnel early in 2012.
However in spite of an IPO in 2011 Digital Domain soon declared bankruptcy in September of 2012 and closed its Port St. Lucie facility, with a loss of hundreds of jobs. The city of Port St. Lucie is now trying to sell or rent the huge office complex, without results as this book is written. The city is on the hook for about $3,500,000 in 2013 and more in 2014. The maintenance and costs of the facility are damaging taxpayers and could lead to bankruptcy.
Digital Domain was not a novice start up with unproven talent. The parent company had won seven Oscars for special effects including Titanic and What Dreams May Come. They employed some of the top computer and software graphics artists in the world.
After the bankruptcy quite a lot of the intellectual property of Digital Domain was acquired, but that did no good for the huge vacant offices in Port St. Lucie which are now being maintained at municipal expense and may push the town in the direction of its own bankruptcy.
The second recent collateral damage example was Studio 38 which was given $75,000,000 in funds by the Economic Development Commission of Rhode Island. This was an animated game company started by former Boston Red Sox pitcher Curt Schilling.
In 2010 the Economic Development Commission (EDC) of the State of Rhode Island agreed to loan $75,000,000 to the Studio 38 game company owned by former Red Sox pitcher Curt Schilling. In return the company moved to Providence and began operations with about 250 employees.
As is common with software applications in the $75,000,000 cost range the main product of Studio 38 ran behind schedule. As is also common with startups, the Studio 38 company itself ran low on funds and fell behind its payments to the State.
In the absence of fresh capital from either film credits, external investors, the State, or other sources, the company missed payrolls, ran out of funds, laid off the entire staff, and then declared bankruptcy.
The bottom line is the urban and state governments are not necessarily qualified to judge whether a given company will actually add jobs, as they all promise, or merely occupy space while financial problems overcome them. The software and high-tech industries are attractive to novice investors because it is true that a number of software companies have become enormously successful and wealthy. But it is also true that a much larger number of software companies have failed and gone bankrupt.