It’s Like the N.B.A., Minus the Money, Fame and Fans

Abstract: ST. JOHN, New Brunswick — In the early stages of their snowy drive to Nova Scotia last month, the St. John Mill Rats occupied themselves as best they could. Their bus featured a couple of rare luxuries: an outlet for a flash drive and a small television that Ricky Volcy, a veteran center, used to play movies that he had downloaded. The volume was spotty, but nobody complained. It could have been worse. Until this season, the Mill Rats traveled the eastern half of Canada aboard a small school bus, with Ian McCarthy, the team’s president and general manager, behind the wheel. The vehicle was neither spacious nor lavish. It also took several months for the team to figure out that there was an operational heater. “No heat, bro!” Volcy recalled. The Mill Rats now charter their travel through a bus company. But these are still basketball vagabonds who, far removed from sneaker endorsements and seven-figure contracts, inhabit a world of bus rides in blizzards, of budget hotels, and of all the fast food they can consume with their $30 per diems. The Mill Rats play in the National Basketball League of Canada, a fledgling circuit with eight teams in four provinces. Five seasons into its existence, the N.B.L. operates as a speck in the shadow cast by the N.B.A., which will hold its annual All-Star Game on Sunday at Air Canada Centre in Toronto. At a time when basketball in Canada has never been more popular, thanks to the influence of the Toronto Raptors and an influx into the N.B.A. of young, homegrown stars like Andrew Wiggins, the N.B.L. continues to search for eyeballs, sponsors and — perhaps most important — dependable transportation. Image The Mill Rats’ Anthony Stover shooting a free throw against the Halifax Hurricanes. The Mill Rats, despite arriving late because of their bus problems, won, 105-100. Credit Michelle Siu for The New York Times On that Wednesday afternoon last month, the Mill Rats were en route to a game against the Halifax Hurricanes when they stopped for a bathroom break. It was 4 p.m., and they were about an hour north of Halifax — plenty of time to make the 7 p.m. tipoff. Then, without warning, their bus wheezed coming out of the parking lot. Rob Spon, the team’s tireless coach, leaned forward in his seat. “Everything all right up there, Bob?” he asked. Bob Kinley, the 70-year-old driver, pressed the gas pedal to the floorboard, but the bus continued to sputter along Nova Scotia Highway 102, a line of cars streaming past. Something was seriously wrong. Several players suggested that Volcy’s flash drive had infected the bus with a virus: “Take Ricky’s thing out!” In the back, Anthony Anderson, the league’s career leading scorer, pulled a winter cap low on his forehead and closed his eyes. Anderson never expected that he would become the face of the N.B.L. That is not how hoop dreams work, especially for a point guard from Lynn, Mass. But he has seen the game grow in New Brunswick, where he now lives year round. During the summer, he runs camps and organizes a pro-am league. An enormous banner of the 5-foot-11 Anderson hangs on the side of Harbour Station, the 6,600-seat arena where the Mill Rats play their home games. Image From left, Anderson, Ricky Volcy, Denny McDonald and Stover. Why does Anderson, at 34, continue to play despite the hardships? “Because it’s basketball,” he said. Credit Michelle Siu for The New York Times “We’ll be in Sussex, which is 45 minutes away, in the middle of extra nowhere, and someone will recognize him,” said Krista Morris, his longtime girlfriend. “They’ll say: ‘Oh, it’s Anthony Anderson! My nephew loves you!’ ” Anderson, 34, still feels that he never got a solid crack at the N.B.A. Did scouts think he would have trouble defending bigger guards? Were his numbers at Massachusetts, where he averaged 11.3 points a game as a four-year starter , too modest for him to be noticed? But he has also come to accept his place in the game, as a high-profile player in a lesser league. There is a purity to the pursuit. Why else would he, and so many of his teammates, be here? Not for the money. Not for the fame. “Because it’s basketball,” he said. At the moment, though, here in the middle of extra nowhere, he was just ready to get off this broken-down bus. A Low-Budget League The day before the Mill Rats left for Halifax, they gathered for practice at the Y.M.C.A. of Greater St. John in this small industrial city on the Bay of Fundy. Image Anthony Anderson, the league’s career leading scorer, at practice at the Y.M.C.A. of Greater St. John last month. Most players in the N.B.L. earn less than $3,000 a month. Credit Michelle Siu for The New York Times Anderson, who insisted on practicing despite being hampered by a sore left hamstring, was joined by a motley crew — teammates like Gabe Freeman, a lanky forward from Phoenix and the Mill Rats’ only licensed mechanic, and Anthony Stover, a former reserve center at U.C.L.A. Stover said he had received more lucrative offers from teams overseas — N.B.L. clubs are subject to a salary cap of 150,000 Canadian dollars (less than $108,000), spread among 12 players — but was lured to St. John after playing for Spon last season with the Rochester RazorSharks of the Premier Basketball League. “I came here specifically because I wanted to win a championship with these guys,” Stover said. At practice, Volcy took a seat as a spectator. His knees were causing him problems, most likely the result of his work as a 6-8 center. But Volcy, one of four Canadians on the roster, was not sure exactly what was causing his discomfort. “You would have to ask Miss Cathy,” he said. Cathy Simon is the team’s physiotherapist. Once upon a time, the league received sponsorship money from a large communications company. But that deal dried up, and the Mill Rats work to make ends meet. Simon, for example, provides her services essentially in exchange for free advertising. She even uses her own medical supplies. “They’re very appreciative,” said Simon, who had eight of the players over to her family’s home for Christmas Eve. “They know they’re spoiled.” Image The Mill Rats stopped for fast food during their chaotic trip to Halifax, which lasted about seven hours. Credit Michelle Siu for The New York Times The N.B.L., with a 40-game regular season from late December through April, is not a big-budget operation. Consider that Carmelo Anthony, due to earn $23 million with the Knicks this season, makes more than 200 times as much as the entire Mill Rats roster. Most players earn 2,000 to 4,000 Canadian dollars a month. “Ian tries to help us out by getting us as many meals as possible — discounts at places like Rocky’s and Jungle Jim’s,” Stover said, referring to McCarthy, the team’s president. “Pro basketball can be tough. It’s not as glamorous as it may seem.” Teams save money whenever possible. Lodging on the road is an extravagance — four teams are based in Ontario, and four are scattered across New Brunswick, Nova Scotia and Prince Edward Island — so players grow accustomed to snowy round-trip bus rides on game days. Despite these measures, McCarthy said, only one or two franchises are profitable. The Mill Rats average about 1,800 fans at their home games, he said. The league has also been trying to recover from a bizarre conclusion to the 2014-15 season. On April 30, before Game 7 of the N.B.L. finals, the Halifax Rainmen showed up several hours early for their game-day shootaround in Windsor, Ontario. One of the coaches from the Windsor Express confronted a player from Halifax, and a brawl ensued. By the time the police arrived, the Rainmen were on a bus bound for the airport. The fallout was something to behold: Windsor won the championship by forfeit, and the league punished nearly everyone from the Halifax team, barring the coach for life, levying fines and suspending 11 players. The franchise subsequently filed for bankruptcy. “It was horrible for the league,” Volcy said. “I’ve got agents who call me to ask, ‘What is going on up there?’ ” In an attempt to wipe away the stain of the entire episode, the team from Halifax rebranded under a new ownership group before the 2015-16 season — the club is now known as the Hurricanes — and overhauled the roster. The league introduced policies that included drug testing and a new dress code. “They’re trying to make it more respectable,” Anderson said. “You have to have things like that in place.” After practice that Tuesday, Spon reminded his players of more pressing business. The Mill Rats had two important games against Halifax coming up: on the road Wednesday and at home Thursday. Their bus would leave promptly at noon the next day. Image Freeman after the team stopped at an auto repair shop in Truro, Nova Scotia. Credit Michelle Siu for The New York Times “Oh, and listen up,” Spon said. “Anybody wants to eat at Rocky’s tonight, food and sodas are half off.” Anxiety on the Road On Wednesday, St. John was already coated with several inches of snow when the team’s charter bus embarked on the 260-mile trip to Halifax. Several players introduced themselves to Johnny Mayhane, a guard who had just signed with the Mill Rats after an unfulfilling two-month stint with a team in Mexico. A thought occurred to Spon: There was only one way to get to Halifax, and that road often shut down in inclement weather. He turned to Kinley, the bus driver. “Bob,” Spon said, “if that road’s closed, we can’t get to Halifax, right?” Spon already knew the answer. Kinley recalled a trip when he “got stuck at the pass” for 18 hours, a breezy anecdote that did not inspire much confidence among the Mill Rats. Fortunately, after a phone call, they learned that the road was open — for now, at least. The bus was large enough for each of the players to occupy two seats, and Anderson settled in for the ride. He recalled the old days when McCarthy drove the bus himself, although he was prone to distraction. Image The bus company sent a replacement vehicle for the Mill Rats, but their transportation woes were not over. Credit Michelle Siu for The New York Times “Dudes would be in the back texting Ian to tell him to stop texting,” Anderson said. Anderson and McCarthy met in 2006, when McCarthy spotted Anderson playing at a summer tournament in Fall River, Mass. His skills were obvious. “I started asking people: ‘Who’s that? Where does he play?’ ” McCarthy said. “They said, ‘His name is Anthony Anderson, and he doesn’t play anywhere.’ I said, ‘What?’ ” At the time, Anderson was working as a debt collector to help support his family. But McCarthy eventually persuaded him to join the Manchester Millrats (one word, not two), a team that was beginning in New Hampshire as an expansion member of the American Basketball Association. Slowed by an injured collarbone during his first few weeks with the Millrats, Anderson was set to make his debut on the road against Halifax. After a 10-hour bus ride from New Hampshire, Anderson played sparingly in the first half. He went straight to McCarthy at halftime. “Listen,” McCarthy recalled telling the coach, “this kid is really good. Give him a chance. He’s going to quit if you don’t do him right.” Anderson emerged as the best player in the league, averaging 23 points and 5 assists a game. He secured a three-day tryout with the Indiana Pacers and went on to play for clubs in Cyprus and Poland. He had chosen an itinerant life, so he was not terribly surprised when he reconnected with McCarthy in 2010 and got some unexpected news: The Millrats were moving to Canada. Anderson was intrigued. Montreal? Toronto? Not exactly. In St. John, the Mill Rats (now two words) share their downtown arena with the Sea Dogs, a team in the Quebec Major Junior Hockey League. McCarthy, who owns 35 percent of the Mill Rats, said the arena was a major factor in the move. He has continued to lean on Anderson for stability, and as a lure for other talented players. It also helped that Anderson met Morris, his girlfriend. Anderson noticed Morris after a game not long after he moved to St. John. One of her friends was dating an assistant coach, and Anderson introduced himself. They recently bought a home together and have a 9-month-old son, Jacari. Anderson likes to point out that Jacari is already tall — in the 97th percentile for a child his age. “He’s a monster,” Anderson said. Anderson has seen pretty much everything during his time in the N.B.L. It is a grind. By the end of the season, the Mill Rats will have played each of the other three teams in their division at least 10 times. The unbalanced schedule creates an unusual dynamic. “There are no secrets,” he said. “We’re just beating each other up all the time.” Anderson expected more of the same against Halifax that night — but he was suddenly sensing some commotion at the front of the bus. Image Guard Corey Allmond on the team’s replacement bus. He later made a critical 3-pointer in the Mill Rats’ victory. They returned home after 5 a.m. Credit Michelle Siu for The New York Times Turmoil and Triumph About 60 miles outside Halifax, Kinley was struggling to guide the bus to safety. Spon summoned Freeman, the team’s resident mechanic, to offer some insight. Back home in Phoenix, Freeman owns a motorcycle shop. He does not need to play basketball anymore. But he still loves the game, he said, and still wants to chase championships, even if he does it in relative obscurity. “You think professional basketball is all peaches and cream until you actually get here,” Freeman said. “You work for this money. Playing ball is the easy part.” Freeman suspected that the bus had a faulty relay switch, but he might as well have been speaking German to his teammates. His mood soured — “Stuff like this shouldn’t happen,” he said — as Kinley pulled into a repair shop in Truro, Nova Scotia. It was after 5 p.m. The bus company had dispatched a replacement vehicle to retrieve the Mill Rats, but the minutes were ticking away. Finally, at 6, the new bus rolled up — a big white school bus. Garrius Holloman, a forward from Wichita, Kan., started to laugh. “They’re going to think we broke out!” he said. “This is a real penitentiary bus!” About seven hours after leaving St. John, the Mill Rats strode through a back entrance at Scotiabank Centre in Halifax — 20 minutes after the game’s scheduled start. In an act of modest benevolence, league officials gave the players about 30 minutes to change, get their ankles taped and warm up. A crowd of several hundred waited patiently in the bleachers. Image Freeman and the Mill Rats’ mascot signed autographs the next night after another win over Halifax, this one at home. Credit Michelle Siu for The New York Times It was absurd, Spon said, to expect his players to unfold their bodies and produce high-level basketball. Yet the Mill Rats did just that. Freeman scored 25 points, Corey Allmond made a huge 3-pointer, and the Mill Rats escaped with a 105-100 victory. Stover, who finished with 14 points, 14 rebounds and 10 blocks, approached a group of hecklers afterward — and gave them all hugs. “Those guys were hilarious,” said Stover, who was pleased with his triple-double. “I just texted my agent, ‘Get me some money, man!’ ” In the locker room, Spon looked spent. “That’s a heck of a win,” he said. Outside the arena around 11 p.m., the Mill Rats got back on the bus. They had a four-hour ride to St. John ahead of them, assuming everything went according to plan. Of course, not long after they left Halifax, more problems surfaced. First, Holloman realized that he had left his cellphone on the team’s original bus, the one that was marooned at the repair shop in Truro. Second, the “check engine” light on the new bus began to flash. It was a disconcerting development accompanied by a high-pitched alarm and the distinct scent of burning rubber. Kinley, so determined at the wheel for much of the day, looked as if he might cry. Freeman suggested that one of the brake lines might be frozen, which sounded ominous. Spon directed Kinley to return to the shop in Truro so Holloman could retrieve his phone and the new bus could be inspected. Several players whimpered. Image Volcy, a veteran center and one of four Canadians on the St. John roster, during the home win over Halifax. Credit Michelle Siu for The New York Times It was well after midnight when they arrived, only to find that the shop was closed. When Spon called a 24-hour service number, he was informed that the shop assessed a $300 fee for someone to come out and open it. Spon characterized this piece of information as a “shakedown.” He haggled the voice on the other end down to $40. A half-hour later, a sleepy-looking man arrived to unlock the shop. Holloman found his phone, but they were stuck with the debilitated bus. While Kinley expressed confidence that he could make it back to St. John, others were less certain. “We’re never going to get home,” said Allmond, a guard from Oxon Hill, Md. Dinner came in the form of a roadside gas station’s finest provisions. Anderson splurged on a chocolate bar, a can of Pringles and two bottles of Powerade. Allmond devoured an enormous bag of barbecue potato chips. It was 2 a.m. “I’m so hungry, it tastes like chicken,” Allmond said. Just after 5 a.m., the bus turned into the team’s apartment complex. The players grabbed their belongings and shuffled away in search of sleep. They had another game in 14 hours. On to the Next Challenge When the players began to congregate for their home game against Halifax the next night, Mike Armstrong looked particularly bleary-eyed, which was understandable: He had spent the day making deliveries for a water company. “I probably got an hour of sleep,” he said. Back when the Mill Rats moved to town, Armstrong worked as one of the team’s ball boys. No one cared much about basketball at the time, he said. Like most of his teenage friends, Armstrong played hockey. But the Mill Rats slowly went about building their brand. “People in school would say, ‘Hey, someday you could be a Mill Rat!’ ” Armstrong recalled. The lone native of St. John on the roster, Armstrong is now a 6-11 center. He mostly collects dust toward the end of the bench, earning a meager salary — thus, his day job with the water company. Not that he minds. “Getting to the point where I’m actually playing with these guys is unbelievable,” he said. Everyone knows the league could use a big sponsor, which sounds simple enough. But McCarthy said businesses were still much more likely to pour their marketing dollars into hockey. “It’s Canada,” he said. McCarthy agonizes over ways to expand the team’s fan base. So the Mill Rats run summer camps. They stage crazy giveaways. They sign dozens of autographs after games. But mostly they try to win. At Harbour Station that night, the Mill Rats continued to play well. Stover blocked shots, Allmond sank jumpers and Anderson directed the offense. “There were years when, if Double-A wasn’t scoring 25, we’d get run out of the building,” McCarthy said, referring to Anderson by his nickname. “But he’s got more help now.” The Mill Rats went on to defeat the Hurricanes for the second time in two nights, a big early-season swing. Afterward, Anderson bundled up in a parka and grabbed a box of pizza from the locker room. He has mulled an end to all of this. He knows his career has an expiration date. “The plan was to get through this season and see,” Anderson said. “But I don’t feel old, right? You get to a point where everything hurts. I don’t feel that way when I’m out on the court.” Yet even as he weighs the challenges, he knows he will have a hard time letting go. All the late nights, all the gas-station dinners, all the broken-down buses — in Canada, the struggle is part of the appeal. “I’ll miss it all,” he said.

Basketball
National Basketball League of Canada
Canada
St. John Mill Rats


Swatch Group to Trim Sales of Watch Parts to Rivals

Abstract: GENEVA — The Swatch Group may be best known for its playful, plastic watches. But it also produces mechanical movements and other watch components that it sells to most of its rival timepiece makers. Starting Jan. 1, though, the company will begin to cut back, and possibly eventually end, its sales of the inner workings to competitors to concentrate on producing watches with higher profit margins and to make sure it has enough supplies on hand for its own brands, including Longines, Omega, Tissot and Breguet. Swatch’s move, which was approved by Switzerland ’s competition authority, is being challenged in court by nine watch companies, many of them small and without the financial wherewithal to produce their own movements. The plaintiffs predict that several companies will disappear because they have few other options for the parts, which must come from Switzerland to keep the lucrative “Swiss made” label. They also argue that if Swatch goes through with its withdrawal, the result could be as wrenching to the Swiss watch industry as the arrival of Japanese digital watches, which almost led to the industry’s collapse in the 1970s. The dispute is fanning resentment of Swatch’s clout and size in an industry that is showing exceptional strength, as demand from Asians who want to communicate their wealth and taste overcomes the worldwide economic downturn and the strong franc. “A lot of companies will cease to exist while Swatch, the monopoly operator, will simply get stronger,” said Peter Stas, the Dutch co-owner of Frédérique Constant, an independent watch company in Geneva that is one of the plaintiffs. Mr. Stas acknowledged that it would have been nearly impossible for him to start out in watchmaking 23 years ago without access to Swatch’s production platform. Swatch’s revenue last year of 6.44 billion Swiss francs, or about $6.95 billion, makes it by far the world’s largest watchmaker. The company insists that its goal is not to strangle competitors. And it argues that its withdrawal will require rivals to raise their spending on manufacturing, thereby strengthening the quality and competitiveness of the Swiss watch sector as a whole. “In no other industry do you have one company supply all the critical parts to the people who then compete directly with it,” Nick Hayek, Swatch’s chief executive, said in an interview this year. Swatch said it had no further comment on the issue. The Swiss watch industry is on course to easily surpass the record 17 billion francs’ worth of watches exported in 2008, according to Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry. The group includes about 500 companies, ranging from the behemoth Swatch to boutique companies that make about 100 timepieces a year but sell them for more than $300,000 each. “We are thankfully in a situation where demand, particularly from Asia, is growing faster than supply,” Mr. Pasche said. Swatch’s dominance of watch manufacturing dates to the early 1980s, when Nicolas G. Hayek, father of the current chief executive, was entrusted by banks to take over two indebted watch companies. He merged them and turned the combined business into a mass-volume production platform for what the company’s Web site describes as “a low-cost, high-tech, artistic and emotional ‘second watch’ — the Swatch,” as well as for other brands. The merger received the blessing of the competition authorities and was seen as a last-ditch attempt to save a sector whose work force had shrunk almost two-thirds in 15 years, to 33,000 employees in 1984. Employment has since climbed back to 49,000, and watch companies now face the problem of recruiting enough qualified staff to meet their orders. In June, the Swiss competition authority ruled that Swatch would be allowed to lower its deliveries of mechanical movements to third parties next year to 85 percent of the 2010 levels, pending an antitrust investigation and a final ruling on whether Swatch could stop supplies altogether. That ruling is expected in the second half of next year. Mr. Hayek’s arguments are even endorsed by some former executives turned competitors. Thanks to Swatch, “there is no other industry with such cheap entry costs,” said Jean-Claude Biver, who spent 12 years on Swatch’s executive committee before becoming chairman of Hublot, which is now part of LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company and one of Swatch’s main rivals. Hublot has been using Swatch components, but since 2007 it has invested 40 million francs to develop its own manufacturing capacity. It is on track to ensure that 75 percent of its revenue will come from watches made entirely in-house within three years, compared with 37 percent now. But, Mr. Biver acknowledged, “the example of Hublot isn’t valid for everybody because you have to have a certain critical mass to justify such a heavy and long-term investment.” Hublot makes 29,000 watches a year, sold at an average of $27,000 each. Companies with neither the margins nor the deep pockets of LVMH fear the worst. “We might as well close now if the only alternative is for us to have to invest in our own production,” said Alexandre Strambini, managing director of Edox, another plaintiff. The company produces 70,000 to 90,000 watches a year, with an average price of $1,600 to $2,200. Even if Edox worked with other watchmakers to invest jointly in production, “I’m really not sure that we would reach sufficient volumes to make such a venture profitable,” Mr. Strambini said. Furthermore, he said, “this is a closed industry, with very little sharing among competitors.” Outside the big watch fair events, “I have never met a director from another company,” he added with a wry smile. “We all somehow seem to believe that we are better than the others.” In fact, the plaintiffs against Swatch filed their lawsuits separately. The largest among them, TAG Heuer, also owned by LVMH, recently withdrew its complaint. It declined to comment on its decision. “So many companies are somehow reliant on Swatch that there should have been 100 plaintiffs,” said Miguel Garcia, owner of Sellita, the second-largest maker of movements in Switzerland. Sellita joined the plaintiffs because it, too, is dependent on Swatch: it currently buys 50 percent of its movements from ETA, a Swatch subsidiary, which it then resells to watch companies. Sellita is building a new factory, but production is not expected to start until 2015, which would leave some of Sellita’s 200 clients short of deliveries because of the cuts imposed by Swatch, Mr. Garcia said. “We’ve accelerated our investment and production plans, but it’s like asking somebody to find overnight the secret formula to make Coca-Cola,” he said. Olivier Müller, an independent watch consultant who also runs Laurent Ferrier, a boutique watch firm, said he expected Swatch’s arguments to prevail. “This whole battle is the result of people completely underestimating the risk that at some stage Swatch could cut off rivals, which is a legitimate decision to make in a free market,” said Mr. Müller, who was a Swatch executive until 2001. Swatch, he added, established “a quasi-monopoly not because of any ambition to control the market,” but because “everybody else was perfectly happy to spend everything on marketing rather than building up their own production.”

Swatch Group
Watches and Clocks
Suits and Litigation
Factories and Manufacturing
Switzerland


Curt Schilling, Rhode Island and the Fall of 38 Studios

Abstract: You have to imagine what it was like being Don Carcieri in the harsh winter of 2010. As Rhode Island’s governor, a Republican in an overwhelmingly Democratic state, he had come into office seven years earlier as a business executive turned politician, vowing to retool the state’s corroded economy. But that winter, Rhode Island was on the precipice of economic ruin. Its unemployment rate was pushing up against 12 percent — fourth worst in the nation — and three of its cities were careening toward bankruptcy. Facing term limits, Mr. Carcieri had only months left to do something to arrest the steep decline. And that’s when Don Carcieri ran into Curt Schilling, the revered former Boston Red Sox ace — the man who had famously bled through a sock while pitching his team to its first World Series title in 86 years. That March, Mr. Carcieri attended a fund-raiser for a prospective documentary at Mr. Schilling’s 25-acre estate in Medfield, Mass. The two men exchanged pleasantries in the living room before the talk turned abruptly to business. “I said, ‘Well, what are you doing?’ ” Mr. Carcieri recalled when I met him recently, at a Panera Bread in East Greenwich, R.I., his hometown. “And he said, ‘I’ve got this business, this company, creating video games.’ Which I knew nothing about — my grandkids know more about it than I do. But he was describing it. He said: ‘It’s a great little company, it’s growing,’ et cetera. And he was looking to grow it further.” More to the point, Mr. Schilling let drop that he wasn’t getting much help in Massachusetts when it came to the financing he needed to expand, and he was frustrated. You can imagine the heralding trumpets that must have been blasting in Mr. Carcieri’s ears as he listened to Mr. Schilling dangle hundreds of jobs in front of him. Image Curt Schilling, center, at an animation team meeting at 38 Studios, his game company, in early 2012. A few months later, 38 Studios sought bankruptcy. Credit Gretchen Ertl for The New York Times Within a few weeks, Mr. Schilling, a novice in the gaming field, was wowing other local politicians with his outsize presence and his grand ambitions to build a Microsoft-like behemoth. And soon Rhode Island’s lawmakers were rushing to approve a deal to make the state Mr. Schilling’s angel investor. The tiny, struggling state issued $75 million in bonds so that Mr. Schilling’s company, called 38 Studios, could relocate to Providence and unleash the world’s next killer fantasy game. Ideas that seem plausible in our darkest moments often seem plainly flawed in hindsight, and you can probably see where all this is going. A little more than two years after Mr. Carcieri first talked to Mr. Schilling about 38 Studios — so named for his baseball uniform number — the company went bankrupt, blowing a sizable hole in the state’s already strained finances. And now Mr. Schilling’s headquarters on Empire Street, the brick building just a few blocks from the Capitol that was supposed to prompt a high-tech urban renaissance, sits locked and abandoned, like some ugly monument to political folly. Image Gov. Lincoln Chafee has called the state’s backing of the company “the worst investment that’s ever been made, I think, in the history of Rhode Island.” Credit Mike Terry for The New York Times Politicians are debating whether Rhode Island can afford to repay the bondholders, or whether it should simply default. Because the bonds are what’s known as moral obligation bonds, the state doesn’t technically have to repay them, but its credit rating could take a hit, and Mr. Carcieri’s successor as governor, Lincoln D. Chafee, has promised that the bondholders would be repaid. Mr. Chafee is also suing Mr. Schilling and his partners, along with a raft of former state officials, banks and law firms involved in the deal, and a criminal investigation is under way. Even in a state that long served as New England’s Mafia headquarters — and a state whose best-known modern political figure, Buddy Cianci, the former Providence mayor, was sent to prison in a federal corruption case known as Operation Plunder Dome — the 38 Studios debacle has registered as a painful embarrassment. (When I called influential Rhode Islanders and told them I was writing about 38 Studios, virtually all of them, even if they had opposed the deal, answered with some version of, “Do you have to?”) Rhode Islanders are used to being played by their politicians. What makes them cringe is the suspicion that virtually all their elected leaders might have been played by someone else. A Beguiling Vision It may be hard to understand how all of this happened without understanding the ancient, one-sided rivalry that exists between Rhode Island, a state of just 1,000 square miles, and Massachusetts, which squeezes Rhode Island on two sides like a vise. Massachusetts is the land of the Red Sox and the Kennedys; Rhode Island makes do with the Red Sox’ Class AAA affiliate in Pawtucket and has a history of rampant political corruption. Going back to the 1980s, Massachusetts developed a high-tech corridor near Cambridge that enabled it to transcend its manufacturing roots. Rhode Island remained stubbornly wedded to its textile makers and jewelry factories, most of them now long gone or crumbling. Image Mr. Chafee's predecessor, Don Carcieri, had seen the company as a potential jobs magnet. Credit Joe Giblin/Associated Press So when Curt Schilling came courting in the weeks after his encounter with Mr. Carcieri, it wasn’t just the promise of jobs that caught the attention of the state’s political establishment. Here was one of Boston’s greatest living legends, a proven winner who had sunk something like $50 million of his own fortune into his company, and he was looking to build it not in Kendall Square of Cambridge, but near the old Jewelry District of Providence. If ever there was a way to show up the Bay Staters next door, this had to be it. “It just felt really good, when this all started, to have the sexy sports celebrity from Boston who seemed to like Rhode Island and showed up in Rhode Island, and who built this exotic new business, even though no one knew what it was,” says the historian Ted Widmer, who grew up in Providence and works at Brown. “It seemed like the digital economy, or biotech, or whatever. But then it turned out that it wasn’t the new digital economy. It was some 13-year-old’s medieval fantasy.” That’s not really an accurate assessment of Mr. Schilling’s start-up, but neither is it entirely off base. (Mr. Schilling declined to talk to me about 38 Studios, citing the continuing litigation; in an e-mail, he called the state’s case against him “wholly without merit and literally 100 percent baseless.”) An avid gamer when he wasn’t on a mound, Mr. Schilling dreamed up 38 Studios near the end of his playing days back in 2006, according to a Harvard Business School case study written in 2009. From the start, his goal was to build what gamers call an MMORPG — for a massively multiplayer online role-playing game — along the lines of the crazily popular “World of Warcraft,” and to get what he called “Bill Gates-rich” in the process. By the time Mr. Schilling pitched Mr. Carcieri on his company, one of the world’s leading video game publishers, Electronic Arts, had agreed to underwrite and publish a scaled-down, console version of the game, titled Kingdoms of Amalur: Reckoning. (A console game is the kind you can put into a system like an Xbox.) But Mr. Schilling estimated that he would need an additional $100 million and a couple of years to finish his multiplayer masterpiece. He had been unable to get it from any of the venture capital firms in Boston, probably because these types of online role-playing games are notoriously expensive and hard to produce — even now, none have approached the commercial heights of Warcraft — and, according to the Harvard Business School study, Mr. Schilling wasn’t willing to hand over even half the company’s equity to prospective investors. He had little patience for their skepticism. “Sitting across from people at investor meetings, I wonder, How can you not understand this?” Mr. Schilling told the study’s authors. “How do you not see what we are doing? And if you do see it, why aren’t you writing a check?” As it happened, Rhode Island had decided to start writing its own checks in an effort to modernize its economy. Mr. Carcieri had overhauled the Economic Development Corporation, a quasi-public agency chaired by the governor and responsible for attracting new jobs. Its 13-member board included the respected chiefs of some of Rhode Island’s leading businesses, including the chairman and former C.E.O. of Hasbro Toys and the vice chairman of Gilbane, an international real estate developer. Image Mr. Schilling at the home of the Rhode Island Economic Development Corporation last May. Credit Steven Senne/Associated Press In past years, the corporation had provided loans of $1 million here or $1 million there, usually to help a local factory buy a new machine or to expand a plant, but now Mr. Carcieri was putting some muscle behind it. He and the Democratic leaders of the Legislature were preparing to appropriate $50 million to the corporation so it could place bigger bets on new industries looking to locate in Rhode Island. For years, state officials had been kicking around the intriguing idea of transforming the old jewelers’ neighborhood in Providence, not far from the Rhode Island School of Design, into a nationally competitive “knowledge district” — the kind of neighborhood to which hip, young graduates would flock to design software. So, right from the start, what Mr. Carcieri and his economic planners saw in 38 Studios was just the sort of high-tech start-up that could be the magnet to revive the area. Before they could realize this vision, however, Mr. Carcieri and the Democratic legislative leaders had to get through a two-step process. First, they had to convince lawmakers to authorize an extra $75 million in bonds issued by the Economic Development Corporation, because Mr. Schilling said he needed at least that much if he was going to relocate to Providence and complete the multiplayer project. They managed to achieve this with only one dissenting vote, which was cast by Robert Watson, then the Republican leader in the House. (“Scandal finds money,” Mr. Watson darkly warned at the time.) With that obstacle out of the way, the project’s boosters had to persuade the business heavyweights on the corporation’s board to approve the loans to 38 Studios. When we talked, Mr. Carcieri emphasized to me that the board, far from being bullied by the governor or star-struck by Mr. Schilling, had engaged in a laborious process of due diligence and had come to see 38 Studios as a solid opportunity. “These are people who are not just going to roll over, even if it’s something I wanted them to do,” Mr. Carcieri told me. Image The fantasy writer R.A. Salvatore, left, with Curt Schilling and Billy Ahlswede at 38 Studios’ headquarters early last year. Mr. Salvatore was recruited to create a fantasy world for a new video game. Credit Gretchen Ertl for The New York Times And yet, you don’t have to dig very hard into the record to find that there were plenty of serious-minded advisers who tried to warn state officials away from 38 Studios. Among them, apparently, was the corporation’s own financial portfolio manager, Sean Esten. According to the state’s pending lawsuit, Mr. Esten was alarmed that 38 Studios’ worst-case projection for its business seemed to rely on releasing a successful game every two years — a track record that most gaming companies can only dream of. “I don’t think I can support a $75 million guarantee to any single company in this industry due to the wide volatility in commercial success of game releases,” Mr. Esten told his bosses in an e-mail. “Perhaps we should develop a toolbox of incentives (including loan guarantees) to attract companies into a cluster and not rely on a single company to build the cluster around.” According to the state’s complaint, Mr. Esten’s bosses decided to bury his analysis. (Like others involved in the deal, Mr. Esten declined to return my calls or e-mails.) Another skeptic was Gina Raimondo, a Democrat who was running for state treasurer at the time and now holds the office . Ms. Raimondo spent the previous decade working in venture capital, and after reading about the proposed investment in July 2010, sent an unsolicited and eerily prescient e-mail to Keith Stokes, who was then the corporation’s executive director and the deal’s main architect. “In general, I would proceed very carefully on this,” Ms. Raimondo wrote. The company “is in the Boston area where there are 200 venture capital firms, and it is in a very hot area of gaming so if it were in fact a compelling investment I would have to think it would be well funded already by venture capitalists; the fact that many have looked at it and passed is a red flag.” (Mr. Stokes, who is out of government and is among those being sued, sent me a one-paragraph statement that said, in part, “I am fully prepared to undertake a vigorous defense and look forward to correcting the false and misleading allegations that have been leveled against me.”) In the end, with warnings like these apparently ignored by the staff, only one of the 13 board members voted against the investment in 38 Studios. That lone dissenter was Karl Wadensten , who owns Vibco, one of the country’s main manufacturers of industrial vibrators. Mr. Wadensten told me that he had simply asked himself some basic questions before the vote: Doesn’t it always take twice as long to bring a product to market as you think it will? And if the economy keeps cratering, aren’t parents likely to stop buying video games for their children? It’s easy, of course, to consider these questions now and to wonder what the rest of the state’s top politicians and blue-ribbon C.E.O.'s were thinking. And no doubt Mr. Wadensten and others deserve credit for seeing the risks. But you can’t really divorce the fateful plunge into 38 Studios from the context of the economic moment. “They were telling us we could have unemployment of 13 or 14 percent!” Gordon D. Fox, the Democratic House speaker , recalled when we sat in his State House office one morning last December. “And you’ve got a population saying: ‘O.K., lookit, we need something to happen now. We need jobs now.’ And O.K., what is government’s role in that?” Mr. Fox and Mr. Stokes were the first Rhode Island officials to meet with Mr. Schilling after he made his pitch to Mr. Carcieri, and Mr. Fox was instrumental in pushing the financing through the Legislature. His father, he told me, had been a jewelry polisher downtown; his mother had worked as a maid. In 2010, people who reminded him of his parents were losing paychecks and getting tossed from their homes, and suddenly there was Mr. Schilling, sitting in front of him with a plan and bursting with entrepreneurial confidence. “I don’t want to make it look like I’m beguiled somehow by a sports guy,” Mr. Fox told me. “But I imagine it’s like certain military generals, when they call them up and say, ‘You know what? We need Eisenhower in there because he’s the guy to lead that fleet across to Normandy.’ You just at some point have confidence that, whatever that intangible is, this guy can do it. And I did get that feeling from him, that if all of this vets out true, this is probably a guy who can pull it off.” A Personal Feud Lincoln Chafeeis one of the more unusual politicians you will ever meet. The scion of one of Rhode Island’s most admired political families, young Linc graduated from Brown in 1975 and promptly went off to shoe horses out West, spending seven solitary years on the Canadian racing circuit. Although he can sometimes seem meek and stammering, all that time alone seems to have instilled in him a steely resolve. Throughout his career as a Republican senator and now as a governor without a party, Mr. Chafee has displayed a stubborn indifference to the wisdom of crowds and an outright contempt for famous figures — most notablyGeorge W. Bush — who strike him as imperious. So it’s not surprising that Mr. Chafee, after talking with some private investors he knew, decided that he wanted nothing to do with Mr. Schilling or 38 Studios. In July 2010, just after the Economic Development Corporation approved the bond issue for Mr. Schilling’s company, Mr. Chafee, who was then a candidate for governor, spoke out against the deal and wondered aloud whether Mr. Schilling was the right business partner for the state. Image In baseball lore, Mr. Schilling is known for pitching while bleeding through his sock in the Red Sox’ championship year of 2004. Credit National Baseball Hall of Fame “I just remember his own teammates didn’t like him,” Mr. Chafee said in a radio interview the day after the vote. “They thought he was a bit of a salesman. I remember one of his teammates said he painted his sock, the bloody sock, he painted it.” (That story turned out to be inaccurate.) Mr. Chafee added, “I don’t know if I trust Curt Schilling.” In the heart of New England, accusing Mr. Schilling of having fabricated the bloody sock was like saying that Betsy Ross had imported her flag from China. Local reporters immediately set about seeing if Mr. Chafee would retract the allegation. He wouldn’t. Thus began the often personal feud at the center of the 38 Studios scandal, between the revered and voluble jock on one hand and the obstinate introvert who was soon to become governor on the other. When it came to sounding the alarm about 38 Studios, Mr. Chafee told me recently, “You couldn’t say I didn’t do everything I could.” Whether Mr. Chafee did everything he could after becoming governor, however, is a different question. He made a point of touring 38 Studios’ new building on Empire Street and trying to reach some accord with Mr. Schilling. Whether or not he liked the deal, Mr. Chafee said, the state was now in business with the company and he was committed to making sure that it succeeded. But then, from all appearances, Mr. Chafee pretty much wiped his hands clean and moved on to other things. As governor, Mr. Chafee chaired the board of the Economic Development Corporation he had accused of negligence, but until 38 Studios went under, he made no consequential changes to the board or its staff. Mr. Chafee told me that he left Mr. Stokes in charge of monitoring the 38 Studios deal because Mr. Stokes was a longtime friend of the state Senate’s president, and removing him would have required more political capital than it was worth. According to an investigation by GoLocalProv.com, the development corporation’s various committees held 63 meetings from September 2010 to May 2012, but not once did anyone discuss the financial health of 38 Studios. The board seemed to be under the impression that a consulting arm of I.B.M. had signed on to police its investment. In fact, I.B.M. was being paid by 38 Studios, not the state, and didn’t issue a single report to the board. Mr. Chafee doesn’t dispute the suggestion that he might have done more to monitor the state’s investment. “I had so many reservations about this being a bad deal, that I was reluctant to micromanage, to have it be ‘Chafee screwing this up,’ ” he told me recently. “And don’t forget, we had our hands full in this state.” He ticked off a series of challenges he has confronted as governor: a $450 million budget shortfall, a small city in bankruptcy, Hurricane Irene and a battle over reforming the pension system. “ We... had... our... hands... full ,” he repeated, tapping the table to emphasize each word. It wasn’t as if the state’s leading politicians were going to run into Mr. Schilling at the Providence Place shopping mall, or sitting at a corner table at Capriccio, so they could ask him what was up with that whole gaming thing. If state officials had envisioned that Mr. Schilling would become a glamorous new pillar of the local business community, they had miscalculated there, too. Mr. Schilling made the drive most days from his Massachusetts home to Providence, but he didn’t become a man about town. Mr. Schilling was talked about but rarely seen, and neither Mr. Chafee nor any other politician I spoke to ever thought to invite him over for a talk about what the company was doing with Rhode Island’s money. ‘The Company Was Curdling’ Had state officials known what was transpiring inside the brick building on Empire Street, it’s a good bet they would have sensed trouble coming a lot sooner. From the start, Mr. Schilling prided himself on offering good pay; the average annual salary, according to Mr. Schilling, was $86,000. “We had as good a health care plan as anyone in the world,” he said in an interview with WEEI, a Boston sports station, after 38 Studios collapsed. And because Mr. Schilling was determined to bring his best talent with him from Boston to Providence, 38 Studios had also assumed responsibility for the mortgages on dozens of its employees’ homes until they could be sold — the kind of incentive not usually offered by start-up companies. As if all of this weren’t expensive enough, as part of his agreement with Rhode Island officials, Mr. Schilling was ramping up at a frantic pace, hiring hundreds of new employees. Mr. Schilling and his main investor found themselves at cross-purposes; he needed to control costs, but the taxpayers had been promised more jobs, and jobs they got. Experts will tell you that a multiplayer online game like Amalur is among the most complex and ambitious projects that a game producer could undertake, even if the company were well capitalized and had a proven record of success. Mr. Schilling’s version was especially challenging, because it was a “player versus environment,” or P.V.E., game, which means that your world as a player can evolve differently than some other guy’s, depending on the choices you make; if you kill a wizard somewhere, the fortress that the wizard might have created somewhere else in the game will never exist. Multiple layers of entire worlds have to be designed and coded. One of Mr. Schilling’s original collaborators was the best-selling fantasy author R. A. Salvatore, whom Mr. Schilling recruited to create a fantasy world with 10,000 years of back story, racking up a bill (still unpaid) of almost $2 million. In 2011 and into 2012, as Mr. Schilling piled up expenses and payroll, 38 Studios was burning through several million dollars a month, with no end in sight. Brett Close, who had been 38 Studios’ founding C.E.O. in Boston but left well before Mr. Schilling struck his deal with Rhode Island, told me that he had pushed Mr. Schilling to consider scaling back his ambitions. He suggested releasing Amalur in smaller phases, rather than “trying to build the skyscraper horizontally and then standing it up.” Mr. Schilling, however, was unmoved. He seemed to think that he could will Amalur into being, in the same way he had always been able to pitch his way out of a bases-loaded jam, even with a throbbing arm. His certainty reassured employees on Empire Street, who had no idea that he was running out of money. Mr. Schilling had been counting on the sales of his console game, Reckoning, to keep the company going until the online game was ready. But in the months after 38 Studios and Electronic Arts introduced that version in February 2012, it became apparent that Reckoning wasn’t going to be the breakout hit that Mr. Schilling needed it to be. In the end, Reckoning sold about 1.5 million units, which was a more-than-respectable debut for a gaming company, but nothing like the spectacular showing that Mr. Schilling had projected. There was no way that he was going to lure more private financing at that point, and he had no more of his own cash to lose. He pledged his collection of gold coins to secure a bank loan for $8.5 million, but time was running out. In April 2012, Mr. Schilling finally reached out to the state, inviting Mr. Chafee and Mr. Fox, the House speaker, down to Empire Street for a meeting. Mr. Chafee recalled that as the two men waited for Mr. Schilling in a conference room, they poured themselves coffee, only to watch the cream in their cups curdle instantly. “In retrospect, it was symbolic, because at that meeting there was indication that the company was curdling,” Mr. Chafee told me. “Curt was talking about his investment, and how much he’d put into it, and how they were going to need more financing.” The two politicians tried to take all this in, then stumbled back into the street, too dazed to speak. Inevitably, the sad, final act unfolded in a swirl of public recrimination. Mr. Schilling thought he had long been promised an additional $14.3 million in tax credits from the state, but the Chafee administration refused to authorize them. “We were in deep already, and like any good investor, show me a bridge to success, and I’ll do the cost-benefit analysis,” Mr. Chafee told me. “We never got that confidence that it was going to lead to something successful.” As Mr. Schilling scrambled for backing and failed to make his payroll for three consecutive weeks, Mr. Chafee publicly called the console game a “flop” and said 38 Studios was “just the worst investment that’s ever been made, I think, in the history of Rhode Island.” He also accused 38 Studios of trying to pass the state a bad check. By the time 38 Studios closed its doors for good in June, dismissing hundreds of employees in an e-mail, the company listed $150 million in debt, $22 million in assets and $320 in petty cash. For his part, Mr. Schilling made it very clear that he blamed Mr. Chafee for scuttling his plans to save the company. In the WEEI interview, Mr. Schilling said that a gaming company had been prepared to sign a $35 million publishing deal for his console game, Reckoning. But then Mr. Chafee went and slammed the company, and Mr. Schilling’s partner fled the scene. “I think he had an agenda, and he executed it,” Mr. Schilling said on the radio of Mr. Chafee. “This is an I-told-you-so, absolutely.” Mr. Schilling said he had basically lost his entire baseball fortune in 38 Studios. Months later, he would auction off his bloody sock. ‘The State Kind of Took Itself’ The state’s 95-page complaint against Mr. Schilling and his 13 co-defendants, most of whom have now filed motions with the court to dismiss the case, reads like the treatment for a modern remake of"The Music Man.” According to the complaint, Mr. Schilling knew that he needed more than $75 million to realize his dream. He also must have known, it adds, that the amount of money he would get from Rhode Island — minus the money set aside for insurance and paid in transaction fees, along with the costs of relocating his employees — would actually fall short of that mark by more than $20 million. The complaint contends that Mr. Schilling purposely defrauded the state by taking its money even though he knew that it wasn’t enough and that 38 Studios was “destined to fail.” This may or may not persuade a jury — and, in any event, it almost certainly won’t get that far, because the main objective is most likely a settlement with the three major banks named as co-defendants in the suit, all of which advised the state or helped issue the bonds. To the casual reader, though, the case against Mr. Schilling may not be all that impressive. After all, if people went around suing everyone who accepted a loan for less money than they actually needed, the courts wouldn’t have time for anything else. In the state’s version of events, Mr. Schilling comes off as an arrogant and overexuberant entrepreneur, possessed of grand delusions. But there’s no suggestion that he intended to swindle anyone. He clearly believed he could succeed. No, it was the entire political establishment of Rhode Island, not Curt Schilling, who decided that it would be a good idea for the taxpayers to capitalize a gaming company that had never actually produced a game, because the guy running it had a World Series ring, and because it might just seed a magic garden of technological innovation. Image Workers removed office items from the headquarters of 38 Studios last May. Credit Steven Senne/Associated Press At bottom, 38 Studios may be that rare political scandal that grew not from any lies that anyone told the public, but from the stories that desperate politicians told themselves. “Maybe this just came down to everyone wanting it too badly,” Mr. Fox told me. Or as another legislator, Charlene M. Lima, a Democrat, put it, “The state kind of took itself.” If there’s a lesson in all this, it probably has to do with the limits of what any government can — or should — do to bring about growth. Just about every state offers some kind of tax incentive or loan program for businesses looking to relocate. But Rhode Island went further than that; in its zeal to land Mr. Schilling, the state took on the role of venture capitalist, without having the expertise to do it well. An actual venture capital firm would have been investing in many companies at once, to minimize its exposure, and it would have demanded a sizable equity stake. It would have taken a seat on the board so it could monitor the money closely and, if needed, restructure the company. Rhode Island, instead, threw most of its venture money into a single, highly speculative start-up, insisted that it more than double the size of its work force, and then walked away. This lesson isn’t lost on Mr. Chafee, who has been preaching a longer-term, more methodical kind of economic development centered on what he calls “the meds and the eds” — that is, hospital and universities, of which Rhode Island has plenty. Brown recently moved its medical school into the hoped-for knowledge district, and the state has just finished relocating a highway in the neighborhood, clearing acres of real estate. Even so, with unemployment in Rhode Island above 9 percent, Mr. Chafee is now a profoundly unpopular governor, and his chances for re-election at this point seem slim. His deliberate approach inspires little confidence. “People don’t like it,” Mr. Chafee acknowledged, shaking his head. “They want the razzle-dazzle.” By which he meant something more like the shimmering kingdom of Amalur, twinkling just out of reach.

Curt Schilling
Computer and Video Games
38 Studios
Rhode Island
Lincoln Chafee
Relocation
Government bond
Donald L Carcieri
Providence Ri


Avoiding Crash, Lindsey Vonn Wins Super-Combined Race

Abstract: Lindsey Vonn won a World Cup super-combined race Saturday in Zauchensee, Austria, despite nearly crashing in the downhill leg. Vonn, the defending overall champion, posted the third-fastest time in the slalom leg to finish in 2 minutes 40.53 seconds over all. Kathrin Zettel of Austria was second, 0.30 back. Anja Paerson of Sweden finished third. “It was incredible,” Vonn said. “It was a tough day. I thought that I would be hurt or crashing, I thought it was over. I tried to get a solid, clean run, no mistakes.” Vonn lost her balance during a downhill jump and almost crashed backward early in her run. She broke the fall with her right arm and quickly recovered. “That was scary,” Vonn said. “I wasn’t in the right position. That was dangerous. I am just happy that I am not injured. My thumb hurts a bit, but it’s no problem.” The overall World Cup leader, Maria Riesch of Germany, went out in the slalom after misjudging a turn. Riesch stayed atop the standings with 729 points. Vonn is second at 716. OLYMPIC COURSE CRITICIZED Pietro Piller Cottrer of Italy won a men’s World Cup cross-country ski race on the site in British Columbia that will host the 2010 Winter Olympics, and then said it was a shame organizers had not built a better course. “I have to admit the previous Olympic courses were better,” Piller Cottrer said after winning the 30-kilometer pursuit. “If they made this up as new, they could do something better.” Cottrer completed the race in 1 hour 13 minutes 1.5 seconds. The meet, which began Friday, is the first Olympic test event held at the $119.7-million Whistler Olympic Park. The facility will host cross-country, ski jumping and biathlon during the Olympics. DEFAGO OUTDOES MILLER Didier Defago of Switzerland won a World Cup downhill on the classic Lauberhorn in Wengen, Switzerland, spoiling Bode Miller’s attempt for a third straight victory. Defago finished in 2:31.98 on the 2.8-mile course, the ski circuit’s longest and most demanding. Miller, the two-time defending champion, was 0.20 behind, and Marco Sullivan was third. Miller, the defending overall World Cup champion, is winless in 19 races. He has finished second three times this season. The 31-year-old Miller said he was still bothered by a left ankle injury sustained when he clipped a gate in a downhill race last month in Beaver Creek, Colo. “I have both physical and mental pain when I ski right now,” Miller said. “I just don’t have the power to do what I want to do.” Miller described his season’s results as “pretty poor, especially considering the way I’ve been skiing.” Michael Walchhofer of Austria retained the lead in the downhill standings despite finishing 26th. Miller climbed to second from sixth. Benjamin Raich of Austria, who did not race, retained the lead in the overall standings. NORWEGIAN FIRST IN BIATHLON Ole Einar Bjoerndalen of Norway won his first biathlon World Cup of the season, capturing the 10-kilometer sprint in Ruhpolding, Germany. Bjoerndalen logged the fastest course time and did not miss a target, finishing the circuit in 23:25.8. Bjoerndalen, 34, improved to third in the overall standings while winning his 82nd World Cup biathlon. FIRST LUGE WIN FOR EICHHORN Jan Eichhorn won a singles luge race for his first World Cup victory, leading a German sweep in Oberhof, Germany. Eichhorn was 15th after the first run but was fastest in the second to finish in a combined time of 1:31.377. The world champion Felix Loch was fastest in the first run but finished second over all. The former world champion David Möller was third. The Italian Armin Zoeggeler finished seventh but kept his lead in the overall standings. Zoeggeler has 501 points. Moeller has 455, followed by Eichhorn with 375. The German doubles team of Tobias Wendl and Tobias Arlt clocked 1:26.169 to defeat Patric Leitner and Alex Resch, who were 0.062 behind. DAVIS TAKES SPRINT Shani Davis won the 1,000 meters at the world sprint speedskating championship in Moscow. Davis finished in 1:08.86, with the Dutchmen Simon Kuipers in second and Stefan Groothuis in third. The defending champion Lee Kyou-hyuk of South Korea and Wang Beixing of China led at the halfway point at Krylatskoye Ice Stadium. Lee, who is aiming for a third consecutive overall sprint title, won the 500 in 34.96 seconds. Lee, who was fifth in the 1,000, leads the overall standings after two of four races with 69.695 points. Davis is fourth with 70.050. In the women’s competition, the defending overall champion Jenny Wolf of Germany won the 500 in 38.00. Wang was second, with South Korea’s Lee Sang-hwa in third.


Security Council Unanimously Passes Ebola Resolution

Abstract: UNITED NATIONS — The United Nations Security Council, in a highly unusual move, on Thursday declared the Ebola crisis in West Africa to be a threat to international peace and security, unanimously passing a resolution that calls on countries worldwide to urgently send medical personnel and supplies to contain the outbreak. “It’s a call to action not just from the Security Council but from the whole United Nations family,” said Ambassador Samantha Power of the United States, which drafted the resolution. In addition, the United Nations secretary-general, Ban Ki-moon, announced a plan to set up an emergency mission to tackle the swiftly spreading disease that has already ravaged the nations of Liberia, Sierra Leone and Guinea and spread panic and fear. “The gravity and scale of the situation now require a level of international action unprecedented for a health emergency,” Mr. Ban said. The 15-0 vote approving the resolution came as the Obama administration pledged medicine, equipment and 3,000 military personnel to help the countries of the region. The resolution was co-sponsored by 131 countries, Ms. Power said, the most co-sponsors of any Council resolution ever.

UN Security Council
Ebola
Sierra Leone
Liberia
Guinea


Overcoming the Confidence Gap for Women

Abstract: When I met Lynne Doughtie this week, I was struck by how different it felt sitting with her than with any male chief executive I had met over the years. Six weeks ago, Ms. Doughtie was elected United States chairwoman and chief executive of KPMG. When she takes over the role on July 1, she will become the first woman to serve in both of those roles for a Big Four accounting firm. Cathy Engelbert was chosen as chief executive of Deloitte in February. In my short time with Ms. Doughtie, I found her to be warm, open, gracious and introspective – in short, qualities more traditionally associated with women. I felt relaxed, comfortable and unhurried talking with her, in part because she seemed more focused on having a conversation than on announcing or positioning herself. By making this observation, I’m reinforcing a stereotype about women — and by implication a parallel stereotype about men, and especially male leaders, as dominant, aggressive and certain. So be it. For all the exceptions, these stereotypes feel true more often than they do not. What seems undeniable is that we need more leaders who make people feel the way Ms. Doughtie made me feel. I say that for a simple reason. The better leaders make us feel – including about ourselves — the better we are likely to perform. In the most interesting research I have come across comparing male and female leaders, the consulting firm Zenger Folkman studied 16,000 of them – two-thirds men, one-third women – as well as their managers, subordinates and peers. Women rated better than men on 12 out of 16 competencies. These included “takes initiative,” “drives for results” and “stretches for results,” all traditional measures of effective leadership. They also included every one of the more human competencies — “practices self-development,” “develops others,” “motivates and inspires others,” “builds relationships” and “collaboration and teamwork.” These leadership qualities are more critical than ever in a highly networked, fast-moving, interdependent global economy. Traditionally, they have been valued far below more technical skills. “Women do tend to be collaborative, and that is important in a world and a work force that is changing so fast,” Ms. Doughtie told me. “The challenge in most organizations is to innovate and adapt. An autocratic style doesn’t serve that. You need different perspectives at the table from diverse backgrounds.” Interestingly, the female leaders in the Zenger Folkman study were rated about equal with the men when it came to solving problems and analyzing issues. The only competencies in which men rated higher than women were technical expertise, innovation and a strategic perspective about the outside world and other groups. In another study , the organization Catalyst found that companies with the highest representation of women in top management consistently experienced better financial performance than the group of companies with the lowest. Despite such findings, the number of women in top leadership roles remains depressingly low and slow to change. Women make up more than half of the work force, but they still represent less than 5 percent of the chief executives of the largest companies, and about 15 percent of senior executives. Only two dozen presidents among the world’s 196 countries are women. Nearly 50 percent of those attending law school today are women , but only 20 percent of the partners at law firms are women. The most obvious obstacle to the rise of women in leadership roles is the degree to which male-dominated corporate cultures still reward long work hours. As Prof. Robin J. Ely of Harvard Business School and her colleagues reported recently, men often feel compelled to sacrifice their families to advance their careers, while many women feel that the cost to their families is too great to pay. Even when women choose to pursue their careers, organizations continue to devalue or undervalue the range of leadership skills they often bring to the table. In addition, as Sheryl Sandberg has pointed out, women often unwittingly undermine themselves. The event at which I met Ms. Doughtie this week was a conference on women’s leadership tied to a Ladies Professional Golf Association tournament, both sponsored by KPMG. Ms. Doughtie’s talk was a summary of the findings in a study that the firm commissioned about women’s attitudes toward leadership. Nearly two-thirds of the 3,000 professional and college-age women in the KPMG study expressed a desire to someday become senior leaders. Only 40 percent were consistently able to envision themselves as leaders. While men often overvalue their strengths, women too frequently undervalue theirs. Call it a continuing confidence gap. Eighty-six percent of the women surveyed were taught be “nice to others” growing up and to do well in school, but less than 50 percent were taught leadership lessons. Two-thirds said they were cautious about sharing their point of view at work or taking steps to become leaders. Ms. Doughtie’s early advantage was having a role model in her own mother, a successful businesswomen who ran a family trucking business, among others. “I had role models all along the way who gave me confidence,” she said. One was John Veihmeyer, KPMG’s global chairman, who grew up with five sisters, each of whom excelled academically and professionally. Mr. Veihmeyer pushed to name Ms. Doughtie the managing partner of KPMG’s United States advisory business 10 years ago, when others felt she was too young for such responsibility. Two-thirds of the women in the KPMG study felt they had learned their most important lessons about leadership from other women, and 82 percent of working women in the study believed that networking with female leaders would help them advance their careers. Even so, four out of five women did not feel comfortable asking for mentors. Ms. Doughtie will now have an opportunity to influence substantially the culture of a company that employs thousands of young women (and men). One way is by constantly retelling her story and by building a network of mentors for young women, both to help them navigate their career paths and encourage them to believe more in themselves. Receiving praise from mentors and leaders, for example, was the single biggest factor influencing women’s perceptions of themselves in the study, more even than receiving raises and promotions. At a broader level, my hope is that Ms. Doughtie — and Ms. Engelbert, who is also the mother of two children — will draw on her experiences to create more humane, flexible and sustainable work environments in a profession long known for relentlessly brutal working hours.

Discrimination
Women and Girls
Workplace
KPMG
Lynne Doughtie
Management


Chicago Embraces Teams as Other Cities Are Jilted

Abstract: Dan McGrath writes a column for the Chicago News Cooperative. Watching Derrick Rose and the Bulls put a one-sided whipping on the Sacramento Kings at the United Center last week raised a question: Anaheim wants this team? Maybe the Kings’ ineptitude was the result of stage fright. They play before mostly empty seats at home, but the U.C. was sold out, as it has been for Bulls games all season — even Monday night games against last-place teams. It was that way in the California capital once, but a torrid, 26-year love affair between the city and its lone major franchise has turned tepid. An inadequate arena, a ravaged economy, a dwindling fan base and an all-American urge to make more money have prompted Joe and Gavin Maloof, the Kings owners, to look elsewhere. Chicago went through a similar ordeal in the late ’80s. White Sox Chairman Jerry Reinsdorf’s dissatisfaction with the old Comiskey Park inspired a serious flirtation with moving the team to the Tampa Bay area, which sought a tenant for a new dome in St. Petersburg. Government intervention helped the Sox stay put. Not so Sacramento: The city is broke and in no position to offer any help to the Kings. Chicago rallied to save its franchise. Politicians literally stopped a clock in Springfield, bargaining against a hard deadline to give Reinsdorf the package he needed to stay put. The Sox back then were a lot like the Kings today: A once-popular franchise that had fallen on hard times, out of the playoffs for four years running and sinking fast. Tampa was staging an aggressive courtship, just as Anaheim is toward the Kings. And there were some who didn’t believe the battle to keep the Sox was worth the effort or the money, another parallel with the Kings. What Chicago did — and what Sacramento has failed to do — was to look ahead and sense what the city might be like without one of its major league teams. Think what a Sox-less Chicago would have meant: No Crosstown Classics. No Ozzie Guillen. No 2005 World Series. No Oney Guillen — never mind. I worked in Sacramento shortly after the Kings arrived, and I can’t envision the city without its signature team, any more than I could envision Chicago without the White Sox during those white-knuckle days in the late ’80s when it took some adroit political maneuvering by then-Governor Jim Thompson to keep them here. Anaheim, though, is an eager suitor, despite the presence of the Lakers colossus and the not-so-mighty Clippers 40 miles up the freeway. Jilted Kings fans might engender more sympathy if Sacramento hadn’t stolen the team from Kansas City, which stole it from Cincinnati, which stole it from Rochester. Pro basketball has been an odd fit in a city whose lone industry is state government and whose hoops history was pretty much confined to one player: Kevin Johnson, the former Phoenix Suns all-star point guard who is now Sacramento’s mayor. Yet upon their arrival the Kings began a sellout streak that encompassed more than a decade and two arenas — first a converted warehouse, then dowdy Arco Arena. Arco, which was cheaply constructed in a forlorn corner of town, seemed outdated within months of its 1988 opening. In either venue the team was unfailingly bad, though the fans remained uncommonly patient. They were very nearly rewarded in the 2002 conference finals against the Lakers, only to be denied by a late Bob Horry shot and some dubious officiating. But as the Maloofs’ business empire crashed, they began cutting corners on the basketball end. The Kings had a 19-52 record through Friday and were 29th of 30 teams in attendance. The fans have finally given up, and Sacramento is resigned to their departure. “Right now the mood is good riddance, although I’m not sure it has sunk in,” said R.E. Graswich, a top aide to Mayor Johnson and a former Sacramento Bee journalist who covered the Kings for seven years. “We’ve grown up as a sports town,” Graswich said. “We’re not going to back any crummy product they put on the floor. We’ve got bigger problems —12.5 percent unemployment, people being laid off or furloughed, their homes in foreclosure. The Kings would be a nice distraction if they were any good, but they’re not.” And soon they’ll be gone. That’s sad. Graswich used to infuriate naively passionate Kings fans with his tough, honest reporting. “The mood was, ‘We not only have a team, we almost beat the Lakers once,’ ” he said. Chicagoans don’t think that way. They don’t have to. The teams here are thriving. Surely you remember the excitement the Blackhawks generated with their Stanley Cup campaign just last season. The buzz is building as the Bulls gear up for a run of their own this year. Even with all their question marks, the Cubs should draw their customary three million fans. Guillen’s White Sox will be close to that if they contend as expected, and the Bears remain the toughest ticket in town, win, lose or lockout. When a city loses a team, it loses some of its hope, the kind that will be rekindled when the Darwin Barney Era begins at Wrigley Field in a week. Let’s see how it plays out.

Sacramento Kings
Chicago White Sox
Franchises
Chicago (Ill)


Scotland Yard and Murdoch Empire Intertwined in Hacking Case

Abstract: LONDON — For nearly four years they lay piled in a Scotland Yard evidence room, six overstuffed plastic bags gathering dust and little else. Inside was a treasure-trove of evidence: 11,000 pages of handwritten notes listing nearly 4,000 celebrities, politicians, sports stars, police officials and crime victims whose phones may have been hacked by The News of the World , a now defunct British tabloid newspaper. Yet from August 2006, when the items were seized, until the autumn of 2010, no one at the Metropolitan Police Service, commonly referred to as Scotland Yard, bothered to sort through all the material and catalog every page, said former and current senior police officials. During that same time, senior Scotland Yard officials assured Parliament, judges, lawyers, potential hacking victims, the news media and the public that there was no evidence of widespread hacking by the tabloid. They steadfastly maintained that their original inquiry, which led to the conviction of one reporter and one private investigator, had put an end to what they called an isolated incident. After the past week, that assertion has been reduced to tatters, torn apart by a spectacular avalanche of contradictory evidence, admissions by News International executives that hacking was more widespread, and a reversal by police officials who now admit to mishandling the case. Assistant Commissioner John Yates of the Metropolitan Police Service publicly acknowledged that he had not actually gone through the evidence. “I’m not going to go down and look at bin bags,” Mr. Yates said, using the British term for trash bags. At best, former Scotland Yard senior officers acknowledged in interviews, the police have been lazy, incompetent and too cozy with the people they should have regarded as suspects. At worst, they said, some officers might be guilty of crimes themselves. “It’s embarrassing, and it’s tragic,” said a retired Scotland Yard veteran. “This has badly damaged the reputation of a really good investigative organization. And there is a major crisis now in the leadership of the Yard.” The testimony and evidence that emerged last week, as well as interviews with current and former officials, indicate that the police agency and News International, the British subsidiary of Rupert Murdoch ’s News Corporation and the publisher of The News of the World, became so intertwined that they wound up sharing the goal of containing the investigation. Members of Parliament said in interviews that they were troubled by a “revolving door” between the police and News International, which included a former top editor at The News of the World at the time of the hacking who went on to work as a media strategist for Scotland Yard. On Friday, The New York Times learned that the former editor, Neil Wallis, was reporting back to News International while he was working for the police on the hacking case. Executives and others at the company also enjoyed close social ties to Scotland Yard’s top officials. Since the hacking scandal began in 2006, Mr. Yates and others regularly dined with editors from News International papers, records show. Sir Paul Stephenson, the police commissioner, met for meals 18 times with company executives and editors during the investigation, including on eight occasions with Mr. Wallis while he was still working at The News of the World. Senior police officials declined several requests to be interviewed for this article. The police have continually asserted that the original investigation was limited because the counterterrorism unit, which was in charge of the case, was preoccupied with more pressing demands. At the parliamentary committee hearing last week, the three officials said they were working on 70 terrorist investigations. Yet the Metropolitan Police unit that deals with special crimes, and which had more resources and time available, could have taken over the case, said four former senior investigators. One said it was “utter nonsense” to argue that the department did not have enough resources. Another senior investigator said officials saw the inquiry as being in “safe hands” at the counterterrorism unit. Interviews with current and former officials show that instead of examining all the evidence, investigators primarily limited their inquiry to 36 names that the private investigator, Glenn Mulcaire , mentioned in one list. As a result, Scotland Yard notified only a small number of the people whose phones were hacked by The News of the World. Other people who suspected foul play had to approach the police to see if their names were in Mr. Mulcaire’s files. “It’s one thing to decide not to investigate,” said Jeremy Reed, one of the lawyers who represents numerous phone-hacking victims. “But it’s quite another thing not to tell the victims. That’s just mind-blowing.” Among the possible victims was former Prime Minister Gordon Brown , who asked the police last year to look into suspicions that his phones were hacked. In response, Scotland Yard sent him a form letter saying it was unclear whether the tabloid had eavesdropped on his conversations, people with knowledge of the request said. The police assigned a new team to the hacking allegations in September after The New York Times published a magazine article that showed that the practice was far more widespread and which raised questions about Scotland Yard’s handling of the case. Shortly after, the police finally reopened those “bin bags.” Now, the police are enduring the painstaking and humiliating exercise of notifying nearly 4,000 angry people listed in the documents that they may have been targets of what now appears to be industrial-strength hacking by The News of the World. The chore is likely to take years. A Series of Inquiries Scotland Yard’s new inquiry, dubbed Operation Weeting, has led to the arrests of a total of nine reporters and editors, with more expected. And the police have opened another inquiry into allegations that some officers were paid for confidential information by reporters at The News of the World and elsewhere. The Metropolitan Police itself is now the subject of a judicial inquiry into what went wrong with their initial case, as well as into the ties between the department’s top officers and executives and reporters for News International. At a parliamentary committee hearing last week, three current and former officials who ran the case were openly mocked. One member of Parliament dubbed an investigator “more Clouseau than Colombo.” At the hearing, the senior investigator in charge of the day-to-day inquiry, Peter Clarke, blamed The News of the World’s “complete lack of cooperation” for the shortcomings in the department’s initial investigation. While editors were not sharing any information, they were frequently breaking bread with police officers. Andy Hayman, who as chief of the counterterrorism unit was running the investigation, also attended four dinners, lunches and receptions with News of the World editors, including a dinner on April 25, 2006, while his officers were gathering evidence in the case, records show. He told Parliament he never discussed the investigation with editors. Mr. Hayman left the Metropolitan Police in December 2007 and was soon hired to write a column for The Times of London, a News International paper. He defended the inquiry that he led, writing in his column in July 2009 that his detectives had “left no stone unturned.” Three months later, Mr. Wallis, the former deputy editor of The News of the World, was hired by Scotland Yard to provide strategic media advice on phone-hacking matters to the police commissioner, among others. Scotland Yard confirmed last week that the commissioner, Sir Paul, had personally approved nearly $40,000 in payments to Mr. Wallis for his work. But when Mr. Wallis was interviewed in April by a New York Times reporter working on a story about the hacking, he did not disclose his new media role at Scotland Yard. In the interview, Mr. Wallis defended both the newspaper and the vigor of Scotland Yard’s initial investigation. A person familiar with the hacking investigation said on Friday that Mr. Wallis had also informed Rebekah Brooks about The New York Times’s reporting. Ms. Brooks, who resigned on Friday as chief executive officer of News International, has maintained that she was unaware of the hacking. A News International spokeswoman said the company was reviewing whether it had paid Mr. Wallis at the same time. It is unclear whether Scotland Yard knew about Mr. Wallis’s activities. While The New York Times was working on its article last year, Scotland Yard was refusing to answer most of the detailed questions that The Times submitted to it in a freedom of information request. It was not until Thursday night that Scotland Yard revealed that Mr. Wallis had worked for it for a year. That revelation came about 10 hours after he was arrested at his west London home in connection with the phone hacking. “This is stunning,” a senior Scotland Yard official who retired within the past few years said when informed about Mr. Wallis’s secret dual role. “It appears to be collusion. It has left a terrible odor around the Yard.” Sky News raised further questions about a possible link between Sir Paul and Mr. Wallis on Saturday night. Just after Christmas last year Sir Paul recovered from surgery at a Champneys Spa in Hertfordshire, and his $19,000 bill was paid by a friend, the spa’s managing partner, Sky News reported. Sir Paul learned Saturday that Mr. Wallis had worked as a public-relations consultant for the spa, a police spokesperson said, adding that “Commissioner Sir Paul Stephenson is not considering his position.” Mr. Stephenson had declared the stay on a gifts list, Sky reported. A lawyer for Mr. Wallis said there was no connection between Sir Paul’s stay at the spa and Mr. Wallis. Mr. Wallis did not return calls seeking comment. He had worked as second in command at the tabloid under Andy Coulson , who left the paper in 2007 after the private investigator and the reporter were found guilty of hacking into the phones of members of the royal family and their staff. Shortly after, Mr. Coulson was hired by the Conservative Party to lead its communications team. Last year, when David Cameron became prime minister, he brought Mr. Coulson to 10 Downing Street. But Mr. Coulson could never escape the hacking controversy. Once Scotland Yard decided to reopen the case, he resigned and was arrested on July 8. It was not until last autumn that the police were forced to confront their own mistakes. By then, they were facing an escalating stream of requests by people who suspected that their phones might have been hacked. Two dozen people had also brought civil cases against News International, and that compelled the police to release information from Mr. Mulcaire’s files. The documents were seized on Aug. 8, 2006, from Mr. Mulcaire’s home in Cheam, south of London. Mr. Mulcaire, a 40-year-old former soccer player whose nickname was “the Trigger,” was nothing if not a meticulous note-keeper. On each page of the 11,000 documents, in the upper-left-hand corner, he wrote the name of the reporter or editor whom he was helping to hack phones. Also seized from his home was “a target list” of the names of a total of eight members of the royal family and their staff, and 28 others, which Scotland Yard’s investigators used as their first road map of Mr. Mulcaire’s activities. ‘A Mutual Trust’ From the beginning, Scotland Yard investigators treated The News of the World with deference, searching a single desk in its newsroom and counting on the staff’s future cooperation. “A mutual trust” is how one police investigator described the relationship. Leaders of the Metropolitan Police decided not to pursue a wide-ranging “cleanup of the British media,” as one senior investigator put it. Mr. Hayman, the investigator in charge, said in testimony before Parliament last Tuesday that the inquiry was viewed as “not a big deal” at the time. The police charged only Mr. Mulcaire and the royal affairs reporter, Clive Goodman . When the case was done, the evidence went into plastic bags in a storage locker, several officials said. It was occasionally reviewed, but a complete accounting would not be done until late 2010. On July 9, 2009, Mr. Yates, the assistant commissioner, said, “It is important to recognize that our inquires showed that in the vast majority of cases there was insufficient evidence to show that tapping had actually been achieved.” And then last year, he told two parliamentary committees that a full accounting of all the evidence had been done. Mr. Yates said investigators presumed that the material in the files was for legitimate purposes since it was the job of both Mr. Mulcaire and Mr. Goodman “to gather personal data about high-profile figures.” Yet on numerous occasions Mr. Yates assured the public that all those affected had been notified. He said the police had “taken all proper steps to ensure that where we have evidence that people have been the subject of any form of phone tapping, or that there is any suspicion that they might have been, that they have been informed.” The parliamentary committees declined to pursue the matter. In the fall of 2006, Sir Ian Blair, then the police commissioner, had the option of assigning the case to the Specialist Crime Directorate, the division that handles homicides, robberies and the like. It had 3,500 detectives at its disposal and could have reviewed every document, several former officials said. The man leading the unit, Tarique Ghaffur, was known among his colleagues for refusing to toe the line. Mr. Ghaffur had led an internal inquiry into the police harassment of a prominent black activist and concluded that the man had been the victim of “unreasonable targeting by police officers.” It was not until July 2009, three years after the evidence was seized, that Mr. Yates ordered some of the names in Mr. Mulcaire’s files to be put into a database, former officials said. But it fell far short of a complete accounting, they said. In one instance, the police thwarted a deeper look at their handling of the evidence. Last autumn, four people, including John Prescott, the former deputy prime minister, and Brian Paddick, a former senior police official, sought a judicial review to determine why Scotland Yard had not notified all the hacking victims. In response, lawyers for the police claimed that none of the four plaintiffs’ phones had been accessed. Last February, a judge ruled against going forward with an inquiry. Within days, several plaintiffs received word from the police that their phones might have been hacked. “The court was misled,” said Tamsin Allen, who represents four people who claim their phones were hacked. “It was pretty outrageous.” A judge recently decided to open a new review of why Scotland Yard did not notify everyone in Mr. Mulcaire’s files. “I still don’t think we know the extent of what the police did and did not do because we are only about halfway down into the murky pond,” said Chris Bryant, a Labour member of Parliament who is one of the four plaintiffs who applied for the judicial review. A Toxic Atmosphere Current and former officials said that shortly after Scotland Yard began looking into the hacking, five senior police investigators discovered that their own phones might have been broken into by The News of the World. At last week’s hearing in Parliament, Mr. Hayman, one of the five, denied knowing if his phone had been hacked. So far, only 170 phone-hacking victims have been notified. A second police operation is now trying to determine how many officers were paid for information from journalists working at The News of the World and elsewhere. One of the challenges, a senior officer said, was that the journalists’ records contained pseudonyms instead of the officers’ names. There is suspicion that some pseudonyms were made up by reporters to pocket cash from their editors, the officer said. The atmosphere at Scotland Yard has become toxic. “Everyone is rowing for the shore,” said a former senior Scotland Yard official. “Everyone is distancing themselves from this mess.” Sue Akers, a deputy assistant commissioner who is leading both police inquiries, said the department faced a deep challenge to repair its reputation. “I think it is everybody’s analysis that confidence has been damaged,” Ms. Akers told Parliament last week. “But I am confident that we have got an excellent team who are working tirelessly to get this right.” She added: “I hope that I do not have to come back here in five years’ time to explain why we failed.”

Scotland Yard Metropolitan Police Service


Oregon: Water Supply to Be Discarded Over Urine in Reservoir

Abstract: Portland will flush millions of gallons of treated water because a 19-year-old was caught urinating Wednesday into an open reservoir. David Shaff, the Water Bureau administrator, said 38 million gallons would be discarded. Two years ago, the city drained a reservoir in a similar situation. The urine poses little health risk, but city officials do not want customers to think the water is tainted.

Portland Oregon
Water pollution
Reservoir
Water


Cuomo to Continue Shrinking State’s Share of CUNY’s Costs

Abstract: Amid the billions of dollars that Gov. Andrew M. Cuomo disbursed with dizzying speed in his State of the State address on Wednesday — $100 billion for infrastructure here, $20 billion for housing there — he left one half-billion conspicuously unmentioned: a third of the annual budget of the City University of New York, which Mr. Cuomo’s latest budget proposed to offload from the state’s balance sheet onto the city’s. In doing so, Mr. Cuomo was once again trying to change a decades-old financing equation, again to the city’s disadvantage. The governor has shifted a significant slice of the cost of basic homelessness services to the city. He has demanded, and won, major concessions from the city over its share of the Metropolitan Transportation Authority’s capital plan. And on Wednesday, the governor went even further, suggesting that the city pay more for CUNY and pick up a larger chunk of the bill for Medicaid . At a news conference on Thursday, Mr. de Blasio did not hesitate to make his displeasure known. “There are two things in the budget that are not fair to New York City, that will be harmful to New York City, that will set us back, and will particularly set back our students at CUNY,” he said. Mr. Cuomo’s aides portrayed the move as eminently reasonable. The university system was once entirely the responsibility of the city whose name it bears, and from which it draws most of its students. During the city’s 1970s fiscal crisis, however, the state assumed control of CUNY’s so-called senior colleges, including City College, Queens College, Brooklyn College and Hunter College, one of many costs the state took on to bail out the city. (The city, which still finances the system’s two-year colleges, now puts about $30 million a year toward the four-year campuses.) It is a history that Mr. Cuomo and his aides often deploy at opportune moments. Their argument: With the city restored to financial health, it is time to reassess. Given the city’s one-third representation on the university system’s board of trustees, the governor and his aides said, it made even more sense for the city to pay a commensurate share of the costs. From the city’s perspective, the sudden four-decade rewind is a “shock to the system,” said Carol Kellermann, executive director of the Citizens Budget Commission, who cautioned against accepting the governor’s rationale too readily. “Because something was done that way before the 1970s doesn’t mean that the crisis didn’t cause us to rethink these things in a more thoughtful and appropriate way.” Mr. Cuomo appeared to soften his language on Thursday, when he said on NY1 that this was only the beginning of a budgetary discussion that would take months. Image Barbara Bowen, president of the faculty and staff union, said of CUNY’s finances, “It’s just a constant, constant austerity, even though we’re way past the recession.” Credit Michael Nagle for The New York Times “At the end of the day, there will be no cut to CUNY,” he said on NY1. “I want to see more money at CUNY at the end of the day, and more money in the classroom.” A spokeswoman for Mr. Cuomo, Dani Lever, explained in a statement that the state wished to redirect savings from “bureaucratic costs” to academics, and that it needed the city’s cooperation to do so. The governor’s plan for CUNY would fulfill two pragmatic objectives at once. Shifting one-third of the cost of CUNY support to the city, some $485 million, would help balance Mr. Cuomo’s budget. It would also allow the state to put $240 million of that sum toward possible retroactive raises for university employees. The Professional Staff Congress, which represents 25,000 CUNY faculty and staff members, has been demanding a new contract and salary increases, both of which it has done without for six years. But the budget’s trumpeting of a $6.9 billion “investment” in CUNY and the State University of New York system papers over a decline in overall state financing over the past several years, leaving the CUNY unions torn between cheering for Mr. Cuomo’s decision to make money available for a possible labor agreement and protesting what amounts to a $485 million cut in state funding. Since before the 2008 recession, the amount of per-student funding that CUNY receives from the state has declined 17 percent, adjusted for inflation. At the same time, tuition has risen by $300 in each of the last five years as a result of legislation backed by the governor that combined tuition increases with greater financial aid. Mr. Cuomo’s proposed budget would extend that legislation another five years. “It used to be free, and now we’re seeing it go up every year for the next decade,” said Chika Onyejiukwa, a junior at Hunter College who serves as the CUNY student senate’s vice chairwoman for legislative affairs. “So the financial burden is being placed on CUNY, and students more so.” Barbara Bowen, president of the Professional Staff Congress, said the squabbling between the city and state over who should pay for what obscured a more urgent problem. Responding to a persistent budget shortfall that stood at about $51 million last year, CUNY has cut down on courses, jettisoned part-time faculty members and skimmed money from student services and even laboratory supplies. What classes remain are getting larger, Ms. Bowen said, and faculty members frustrated by the lack of raises have moved on to other jobs. “It’s just a constant, constant austerity, even though we’re way past the recession,” she said. “That’s why we say that the discussion should be about increasing resources to CUNY after this long starvation, not just who’s going to take responsibility for already inadequate funding.”

Andrew Cuomo
Bill de Blasio
NYC
College
New York
Budget
CUNY