Just curious: do you think that economic development agencies would be improved if governments were willing to pay salaries equivalent to private investment firms, thus attracting better talent?
Governments will always be bad with money because they never are dealing with their own money.
This was a case of garden variety corruption, where the gov wasn't even getting kickbacks, he just liked the Red Sox, Schilling's a hero in New England, and he saw him as a fellow traveler conservative. If Schilling was going to George Clooney's fundraisers, this deal doesn't happen.
FWIW I agree that the government shouldn't be in the investment game except for strategic investments by the federal government (ball bearings, green tech, DARPA, stuff like that). Certainly not video game companies.
There is still a role for development agencies, doing stuff like helping streamline paperwork, advocating for sewer hookups, stuff like that. They shouldn't be investors.