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Rory McIlroy Warns PGA Tour’s Two-Track Overhaul Could Turn Marquee Events Into Minor League Golf

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Scottie Scheffler

SOUTHAMPTON, N.Y. — Rory McIlroy arrived at Shinnecock Hills this week carrying six major championships, considerable credibility, and a pointed warning for the PGA Tour’s leadership: the sweeping structural overhaul being crafted behind closed doors risks degrading the very tournaments that define professional golf.

Speaking to reporters Tuesday ahead of the U.S. Open, McIlroy said he fears the proposed two-track competition model — a promotion-and-relegation framework modeled loosely on European soccer — will drain prestige from long-standing events that cannot secure elite-level sponsorships.

“I just think there’s going to be certain events that might lose their stature if a sponsor doesn’t pony up $30 million, so that’s the tough thing,” McIlroy said. “An event like last week, the Canadian Open, potentially going to one of these Track Twos — I don’t think the Canadian Open should be one of those.”

The comments were direct, unsolicited and striking in their scope. McIlroy, who briefly served on the Tour’s policy board in 2023 and was arguably the most visible player-ambassador during golf’s civil war with LIV, went further than criticizing the plan’s mechanics. He questioned its entire premise.

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“I think, as they’ve done all this work, you start to realize that the way the Tour was before LIV came along was actually pretty good,” McIlroy said. “It was a pretty good structure, and everything sort of worked pretty well.”

A Restructure Years in the Making

The PGA Tour has been working toward a fundamental competitive overhaul since CEO Brian Rolapp took over last fall. At the Players Championship in March, Rolapp publicly signaled the Tour would adopt a two-tiered framework, citing the Premier League’s promotion-relegation model as an inspiration. Since then, a Future Competition Committee and a Player Advisory Council have been meeting regularly to hammer out details.

Under the proposal taking shape, Track One would comprise roughly 15 to 18 tournaments — including the four major championships and The Players Championship — featuring fields of approximately 120 to 130 players with 36-hole cuts restored at every event. Track Two would serve as a direct competitive pathway to Track One, with smaller purses, lower sponsorship thresholds, and fields of around 140 players. Between 20 and 30 spots would be available each season for Track Two players to earn promotion, with an additional 10 players joining annually from the DP World Tour under the current Strategic Alliance.

Rolapp said the model is designed to restore competitive meritocracy after years of signature events with 72-player fields and limited cuts. “I think we have lost a lot of that with the smaller field, no-cut events,” he said at the Memorial Tournament earlier this month. “The competitive meritocracy that makes this sport great and unique — we’ve gotten away from, and we’re getting back to it.”

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Despite the momentum, Rolapp acknowledged that the full model likely will not launch until the 2028 season given the complexity involved. “There’s all sorts of questions,” he said. “It looks like it’s more ’28 just because of the complexity of not only the competitive model, but also the commercial things you need to do to actually put a new competitive model in place.” The Tour’s policy board is expected to vote on the framework June 22, the Monday before the Travelers Championship, when Rolapp is also scheduled to brief the media.

McIlroy Is Not Alone

The resistance to the proposed changes extends well beyond one player. Jack Nicklaus, the 18-time major champion whose Memorial Tournament is one of the events most likely to remain on Track One, expressed reservations of his own earlier this month in Dublin, Ohio.

“I don’t want to comment on the Tour’s schedule because I’m not exactly in favor of what they’re doing right now,” Nicklaus said at the Memorial. “I want to sit down with Brian and have that conversation. I hate to see tournaments bunched too much together with too many big tournaments too close together. That’s a problem, I think, and I think that’s going to be a problem for the Tour in the future.”

Tournament operators bracing for a second-tier designation have raised similar alarms, questioning whether they would commit to major prize funds for what amounts to a feeder circuit. Broadcast partners have sought clarity on what they are actually paying to air under existing rights agreements. And as Golf Digest reported Tuesday, some players see the proposal as little more than the existing PGA Tour and Korn Ferry Tour hierarchy repackaged under a different name.

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McIlroy’s use of the phrase “glorified Korn Ferry events” was blunt in that regard — a direct comparison to a developmental tour that sits below the PGA Tour and carries substantially less prestige.

The LIV Factor

Central to McIlroy’s skepticism is the shifting landscape that gave rise to the reform push in the first place. The PGA Tour’s scramble to cut fields, increase purses, and consolidate talent at the top was a direct response to LIV Golf’s Saudi-backed challenge beginning in 2022. But with LIV’s funding from Saudi Arabia’s Public Investment Fund set to be pulled after this season, McIlroy argued the threat that justified those emergency measures has largely dissipated.

“LIV created this false economy where we had to up prize funds and had to cut fields and try to support the top players and all that stuff,” McIlroy said. “Which I think needed to happen because that was the only way to retain talent at the time, but now that LIV looks like it’s less of a threat, I think, as I said, the old ways of the PGA Tour weren’t actually that bad.”

That view — that the Tour may have overcorrected in its response to LIV and is now building a permanent structure on a foundation that was always meant to be temporary — is one Rolapp has not publicly engaged with directly. The CEO has maintained that the new model is about restoring the competitive integrity of professional golf for the long term, not about managing the LIV threat specifically.

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A Critical Week Ahead

The timing of McIlroy’s remarks, arriving days before a consequential policy board vote, is unlikely to be lost on Tour leadership. The six-time major winner acknowledged he no longer has a seat at the table — “I’m not in those rooms,” he said — but his words carry weight well beyond the committee rooms at Tour headquarters.

Rolapp is expected to deliver a comprehensive public update on June 23, the day after the board vote, at the Travelers Championship in Cromwell, Connecticut. The announcement is anticipated to include which tournaments will be assigned to each track, new market expansions under consideration — cities including Boston, Chicago, Denver, New York and Philadelphia have been discussed — and details on a revamped postseason format that could include match play.

For now, one of professional golf’s most influential voices is not yet sold. “I’ll continue to play my schedule,” McIlroy said, “which is getting less and less as the years go on.”

The U.S. Open continues this week at Shinnecock Hills Golf Club in Southampton, New York. The PGA Tour’s policy board vote is scheduled for June 22.

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Accenture tumbles 16% on guidance cut; announces Dragos, runZero, NetRise deals

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Accenture tumbles 16% on guidance cut; announces Dragos, runZero, NetRise deals

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Like Air launches drizzled rice cakes

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Like Air launches drizzled rice cakes

New product contains only 80 calories per 24 pieces.

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Merchandise for UFC Freedom 250 card sets all-time record for single event

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Merchandise for UFC Freedom 250 card sets all-time record for single event

UFC is all in on America 250. 

UFC announced the launch of exclusive limited-edition apparel collections with four brands that have integrated themselves into streetwear culture: Anti Social Social Club, Warren Lotas, ID Supply Co., and Culture Kings. 

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The limited-edition apparel collections made their debut on the White House South Lawn on Sunday during the UFC Freedom 250 spectacle and have flown off the shelves.

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UFC Freedom 250 shirt

Model wears a part of the UFC Freedom 250 collection, which released ahead of the fights on the White House South Lawn.  (UFC / Unknown)

The collaborations were a massive hit, as they set an all-time UFC merchandise record for a single event. They also doubled the company’s previous revenue record.

Within the collection there are T-shirts, hoodies, mugs, and more that combine America 250 and UFC into one. 

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Anti Social Social Club is a Los Angeles-based brand whose deliberately limited released helped grow a massive and dedicated following in streetwear. For the UFC Freedom 250 collection, the Anti Social Social Club brought its signature aesthetic to the world’s premier mixed martial arts organization. 

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Anti Social Social Club shirt

An Anti Social Social Club shirt that is part of the UFC Freedom 250 collection.  (UFC / Unknown)

Warren Lotas is also a Los Angeles-based artist and designer whose dark aesthetic, unapologetic style and hand-drawn imagery have become iconic, making him one of the most recognizable and sought-after names in streetwear. He released a fighter-themed T-shirt collection in the UFC Freedom 250 drop. 

ID Supply Co. the premium merchandise house and brand licensing group, created a graphic T-shirt line that showcases the historic UFC Freedom 250 card.

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UFC Freedom 250 hat

UFC Freedom 250 hat, made by the Anti Social Social Club.  (UFC / Unknown)

Culture Kings offered UFC Freedom 250 fighter-themed T-shirts as the final part of the campaign. The collections are available on the UFC Store’s website but are quickly selling out. 

The UFC Freedom Spectacle saw 14 fighters compete in the cage, with an estimated 4,300 people in attendance. 

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Methods to reduce bread packaging line costs

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Methods to reduce bread packaging line costs

Bakeries need to focus on the end of the line to reduce costly downtime while being a good steward to the environment.

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Qantas to launch world’s longest nonstop commercial flight between Sydney and London

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Qantas to launch world’s longest nonstop commercial flight between Sydney and London

Qantas plans to launch what it says will be the world’s longest nonstop commercial flight in October 2027, connecting Sydney and London with a journey expected to last up to 22 hours.

The Australian airline announced Wednesday that nonstop flights between the two cities will begin operating as part of its long-awaited Project Sunrise initiative, which aims to connect Australia’s east coast directly with major global destinations.

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Qantas unveiled the first of its specially configured Airbus A350-1000ULR aircraft at Airbus’ manufacturing facility in Toulouse, France. The aircraft has been modified for ultra-long-haul travel and includes an additional 20,000-liter fuel tank that allows it to travel more than 16,000 kilometers, or nearly 10,000 miles, nonstop.

The Sydney-London route will become the first nonstop service between Australia’s east coast and the United Kingdom. According to Qantas, the flights will reduce travel time by as much as four hours compared with existing one-stop itineraries.

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qantas airplane

Qantas aircraft at Sydney Airport. April 10th, 2026 (Wolter Peeters / The Sydney Morning Herald via Getty Images / Getty Images)

“Since we first flew the Kangaroo Route in 1947, where we stopped seven times on the way to London, every generation of aircraft has taken a stop out of the journey,” Qantas Group CEO Vanessa Hudson said in a statement. “Today, we’re taking out the last one.”

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The launch marks a significant milestone for Project Sunrise, an initiative first announced by Qantas in 2017 to push the limits of commercial long-haul travel.

Qantas said the A350-1000ULR aircraft were designed specifically for the project and will carry 238 passengers across four cabin classes. The airline plans to take delivery of 12 of the aircraft.

Qantas Airways Boeing 737-800 plane

A Jetstar Airlines Boeing 787-8 plane and a Qantas Airways Boeing 737-800 plane line up with other aircraft on the runway at Sydney International Airport on a windy day in Sydney on June 25, 2025.  (DAVID GRAY/AFP via Getty Images / Getty Images)

The carrier said nonstop Sydney-London flights will go on sale in February 2027 ahead of the service launch later that year.

The route is expected to surpass Singapore Airlines’ nonstop service between Singapore and New York, currently regarded as one of the world’s longest regularly scheduled commercial flights.

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Qantas cited recent research showing growing demand for ultra-long-haul travel, with 70% of surveyed Australians indicating they would consider booking a nonstop flight of that length. Among premium travelers, interest rose to 80%, according to the airline.

A Qantas Airbus A330 aircraft lands.

A Qantas Airbus A330 aircraft lands. (Qantas / Fox News)

The company said more than 1.7 million passengers have flown on its existing nonstop long-haul routes since 2018, including services linking Perth with London, Rome and Paris.

Qantas plans to expand Project Sunrise beyond London. The airline confirmed that Sydney-to-New York will be the next route added to the network, with additional details expected next year.

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The airline said pilots, cabin crew and maintenance personnel are already undergoing training ahead of the aircraft’s arrival and entry into service.

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Chairman Warsh Offers No Guidance, And Investors Hit The Sell Button

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Under A Warsh Fed, Expect A Thoughtful Policy Approach

This article was written by

Lawrence Fuller has been managing portfolios for individual investors for 30 years, starting his career at Merrill Lynch in 1993 and working in the same capacity with several other Wall Street firms before realizing his long-term goal of complete independence when he founded Fuller Asset Management. He also manages the Focused Growth portfolio on the new fintech platform called Dub, which is the first copy-trading platform approved by securities regulators in the US, allowing retail investors to copy the portfolio and ongoing trades of the manager they choose automatically. You can also find him on Substack and lawrencefuller.substack.com.He is the leader of the investing group The Portfolio Architect, which focuses on an overall economic and market outlook that complements an all-weather investment strategy designed to produce consistent risk-adjusted market returns. Features include: Portfolio construction guidance, access to an “All-Weather” model portfolio and a dividend and options income portfolio, a daily brief summarizing current events, a week ahead newsletter, technical and fundamental reports, trade alerts, and 24/7 chat. Learn More.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Lawrence Fuller is the Principal of Fuller Asset Management (FAM), a state registered investment adviser. He is also the manager of the Focused Growth portfolio on the copy-trading platform Dubapp.com. Information presented is for educational purposes only intended for a broad audience. The information does not intend to make an offer or solicitation for the sale of purchase of any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. FAM has reasonable belief that this marketing does not include any false or material misleading statements or omissions of facts regarding services, investment, or client experience. FAM has reasonable belief that the content as a whole will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances or market events, nature and timing of investments and relevant constraints of the investment. FAM has presented information in a fair and balanced manner. FAM is not giving tax, legal, or accounting advice.
Mr. Fuller may discuss and display charts, graphs, formulas, and stock picks which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. Such charts and graphs offer limited information and should not be used on their own to make investment decisions. Consultation with a licensed financial professional is strongly suggested. The opinions expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in market or economic conditions and may not necessarily come to pass.

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Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Unemployment in Wales up but remains below the UK level

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Wales has nearly 500,000 people classed as being economically inactive

(Image: Copyright Unknown)

Unemployment in Wales has risen slightly but remains below the rate for the UK as a whole.

According to the ONS, unemployment in Wales was up 0.3% in the three months from February to April to 3.8%. For the UK unemployment was down 0.3% to 4.9% on the previous quarter.

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On the three months to March UK unemployment was down from 5% .Of the UK nations and regions unemployment was only lower than in Wales in the south east of England (also 3.8%) and Northern Ireland at 1.7% – although the province has the highest economic inactivity rate in the UK. The highest unemployment rate remains London at 6.6%.

On the previous quarter the number of unemployed in Wales was up 5,000 to 59,000. On the year it was down 14,000. For the UK it was down 105,000 to 1.6 million, but up 124,000 on the year.

Wales has the third lowest employment rate in the UK of working age adults, behind the north east of England (71.1%) and Northern Ireland (71.9%) at 72.3%. The rate for the UK as a whole is 75%.

The number of working age people in Wales classed as economically inactive – so not actively seeking employment – was 24.8%. It was only higher in Northern Ireland at 26.8%. For the UK as a whole it was 21%. The number of economically inactive, which includes those on long-term sick, in Wales stands at 484,000 – which was down 11,000 on the quarter. Amongst young people, aged 16 to 24, some 17% – higher than the UK level -are classed at Neets (not in education, employment or training.)

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As with the previous Labour Welsh Government, the new Plaid Cymru administration said say that the ONS figures, based on its Labour Force Survey, had to taken with a degree of caution. While the ONS, headquartered in Newport, is continuing its work on improving the robustness of the survey, Cabinet Minister for Enterprise, Connectivity Adam Price is seeking a meeting to discuss the reliability of the data.

A spokesman for the Welsh Government said; “As a newly elected Government we are committed to driving investment, innovation and higher productivity across Wales.

We have announced a National Productivity Goal to close the gap with the rest of the UK and help unlock the full potential of the Welsh economy.

“By focusing on productivity, we will deliver more jobs, higher pay, stronger businesses and thriving communities.

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“This goal will give direction to our new Welsh innovation and development agency, shaping how we support businesses, develop skills and invest in the foundations of a stronger, more competitive Welsh economy.

“Evidence from a range of sources suggest the labour market in Wales is following a similar trend to the UK as a whole.

Amid continued interventions from the Office for National Statistics to increase the quality of the Labour Force Survey data, we continue to recommend using the LFS data alongside the trends in other measures of the labour market to gain a clearer picture of the Welsh labour market.

Latest figures from the Annual Population Survey (APS) show the unemployment rate for people aged 16 and over in Wales was 4.5% compared to the UK rate of 4.4%. It also shows Wales’ employment rate is relatively close to the all-time high.

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“The Cabinet Minister for Enterprise, Connectivity and Energy, Adam Price, is keen to meet with the ONS to discuss the reliability of Labour Market data for Wales.”

On the UK picture Liz McKeown, ONS director of economic statistics, said: “The labour market remained broadly stable in the latest quarter, with further softening evident in some measures.

Payroll numbers continued to fall over this period, with new recruits at their lowest level in five years.”

She added there were “some signs of workers moving into self‑employment”, while the vacancies decline signalled firms are “becoming more cautious about taking on new staff”.

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The ONS said its vacancies survey showed some firms are putting recruitment on hold due to economic uncertainty and higher labour costs.

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Burmese pythons in Florida are changing Everglades in a surprising way: Study reveals giant snakes are spreading seeds

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Burmese pythons in Florida are changing Everglades in a surprising way: Study reveals giant snakes are spreading seeds
Burmese pythons, already blamed for damaging wildlife populations in Florida’s Everglades, may be affecting the ecosystem in another unexpected way. A new study has found that these invasive snakes could accidentally help spread plant seeds after eating birds and mammals that feed on fruits.

The research suggests that the impact of Burmese pythons goes beyond hunting native animals. By moving seeds through their digestive systems, the snakes may influence how plants spread across South Florida’s wetlands and could play an unnoticed role in changing the region’s natural landscape.

Scientists found plant seeds inside Burmese pythons

The study, published in the Journal of Zoology, was carried out by researchers from the University of Florida, the US Geological Survey and the Conservancy of Southwest Florida.
Also Read: People who are obsessed with charging phones to 100% aren’t doing it due to any phone addiction; studies say they are not addicted to their phones, they fear losing connection

Scientists examined digestive tract samples collected from Burmese pythons in South Florida and discovered 25 different types of seeds inside the snakes. The seeds included those from native plants such as cabbage palm and creeping cucumber.

Researchers said the snakes likely picked up the seeds indirectly by eating birds and mammals that had already consumed fruits. This process is known as secondary seed dispersal, where one animal helps move seeds after another animal has eaten them.
The researchers explained that invasive reptiles can influence plant movement in different ways. A python may directly spread seeds by consuming them, or it may transport seeds after eating another animal that carries them.

Some seeds survived after passing through python digestion

The study also tested whether the seeds could still grow after being inside a python. The results showed that nearly 40 per cent of cabbage palm seeds survived digestion and were able to germinate.
This indicates that Burmese pythons may unintentionally help plants reach new locations. Scientists said this could affect the balance of vegetation in the Everglades, where even small changes in plant distribution can influence the wider ecosystem.

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Researchers believe the effect could apply to both native plants and invasive species, making the role of Burmese pythons more complex than previously understood.

Invasive snakes have already damaged native wildlife

Burmese pythons are considered one of Florida’s most harmful invasive species. Over the last two decades, the snakes have contributed to a sharp decline in several native mammals, including raccoons, rabbits and foxes.

These animals were important seed carriers in the ecosystem. As their numbers reduced, pythons may have started replacing part of that role, although scientists warn that a predator taking over the work of native animals can create uncertain consequences.

Also Read: Salary doesn’t decide happiness: Many see income and achievements as measure of success, but one study says the respect from people around you matters more than your place on the economic ladder

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The researchers said the change highlights how invasive species can affect nature in unexpected ways.

Scientists warn that invasive species can have hidden impacts

The study’s authors said invasive species “reshape ecosystems in ways that are not always obvious”. While Burmese pythons are widely known for reducing native animal populations, their influence may extend to other parts of the environment.

Melissa Miller, a University of Florida researcher involved in related python studies, previously said, “Our study links python ecology with removal efforts,” adding that long-term research is essential to better understand “cryptic, long-lived species such as Burmese pythons.”

Scientists said the findings show that invasive animals can create environmental changes through multiple pathways. Some effects may only become visible after years of research.

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The study adds another layer to the growing understanding of Burmese pythons in Florida. Even after decades of monitoring the species, researchers continue to discover new ways these giant snakes are influencing the Everglades.

Understanding these hidden connections could help conservation teams develop better strategies to protect one of the world’s most important wetland ecosystems.

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Federal government cuts grants to native title representative bodies

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Federal government cuts grants to native title representative bodies

Project proponents have been warned of approval delays after the federal government cut grants to native title representatives by as much as 40 per cent.

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California IPO tax windfall: Factors complicating the equation

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California IPO tax windfall: Factors complicating the equation

The iconic Golden Gate Bridge and the stunning San Francisco skyline as seen from the Marin Headlands during the vibrant spring season.

Dan Kurtzman | Moment | Getty Images

A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.

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The blockbuster SpaceX IPO and potential upcoming public offerings for OpenAI and Anthropic could create a tax windfall for the state of California. Yet the revenue boost may fall short of previous tech IPOs – at least relative to the firms’ valuations – given the specific nature and tax treatment of today’s tech compensation.

Following its IPO last week, SpaceX is now valued at $2.5 trillion, minting many of its employees who live and work near its Hawthorne, California, office as millionaires, at least on paper. California-based Anthropic and OpenAI are also expected to go public later this year at valuations that could approach $1 trillion.

The burst of tech wealth has drawn comparison to the 2012 IPO of Menlo Park-based Facebook, which generated $1.3 billion in taxes for the Golden State, per the California Department of Finance’s estimate. Facebook’s valuation at the time was just $104 billion, suggesting the new crop of super-IPOs could theoretically generate billions more.

But the revenue impact may be blunted, due to how these employees’ stock compensation was structured and because tech employees today have more tools at their disposal to mitigate their tax burden, experts and financial advisors told CNBC. 

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As companies have stayed private for longer and reached sky-high valuations, financial institutions have increasingly catered to equity-rich, cash-poor startup employees with tax strategies that were traditionally only available to founders. 

For instance, employees at some startups can get a tax deduction by donating private, pre-IPO stock to a donor-advised fund, according to Richard Lowry of wealth manager Cresset. He said such donations were generally limited to the ultra-wealthy as recently as a decade ago, since few charitable organizations were equipped to accept or manage those assets.

“Historically, the only people who had equity in a private company and were certainly in a position to give it away were millionaire or billionaire founders who already had their own controlled structures, like a private foundation, where they could decide what they accepted,” said Lowry, managing director and head of tax strategy at Cresset. “Now there is a cottage industry around allowing people to avail themselves of this.”

There’s also a timing consideration on the SpaceX windfall.

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Tax revenue generated by an IPO largely comes from two sources: ordinary income taxes on employees’ restricted stock units, or RSUs, when they vest and capital gains taxes paid when shareholders sell appreciated stock. 

SpaceX uses a unique stock-pay structure that may have pulled forward the tax revenue on the vesting of employees’ shares. At most private companies, RSUs vest after two conditions are met: continued employment with the company and a liquidity event like an IPO or acquisition. This dual-trigger RSU structure leads to a boom in taxable income on IPO day. 

Many SpaceX employees, however, have been paying income taxes on their RSUs for years as share vesting was only tied to employment, not a liquidity event.

This stock-pay structure has made it challenging to estimate tax revenue associated with the SpaceX IPO, according to the California Legislative Analyst’s Office. 

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“Revenue totals will depend more on financial decisions made by employees and investors who hold pre-IPO SpaceX shares and stock options,” the LAO wrote in a statement. “Relative to past IPOs, tax revenues from the SpaceX IPO are likely to be less immediate and more unpredictable.” 

The LAO, which advises state lawmakers on budget and fiscal policy, has not published tax revenue estimates for the IPOs of SpaceX, Anthropic or OpenAI. That said, the LAO’s statement to CNBC was cautiously optimistic that the market debuts would pad the state’s coffers.

“Past major tech IPOs have generated significant income tax revenue for the state and these upcoming IPOs certainly have the potential to do the same,” the statement reads.

The California Department of Finance also has not published revenue estimates for the IPOs, citing the risk that companies frequently delay their IPOs in the event of a market downturn. OpenAI and Anthropic, which each filed confidential S-1s in recent weeks, could do the same. 

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The Department has reason to be conservative as market swings have undermined its revenue forecasts before. It had to revise its revenue estimate from the Facebook IPO from $1.9 billion to $1.3 billion after the social media giant’s share slump.

The Department’s budget report noted another factor that could limit the upside from IPOs: the growing trend of private companies allowing employees to sell stock before going public, reducing the backlog of stock taxed upon IPO.

Employees at SpaceX, Anthropic and OpenAI have had ample opportunity to take some chips off the table well before a public offering. In October, OpenAI finalized a secondary share sale totaling $6.6 billion in which current and former employees could sell their shares at a $500 billion valuation. CNBC previously reported that OpenAI plans to facilitate a tender offer at a $852 billion post-money valuation.

Tender offers have grown in popularity as a way to reward employees and investors as the timeline to exit has grown longer, according to Hamza Shad, insights manager at startup equity management firm Carta.

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Gains on these sales are still taxed, but selling earlier pulls that tax revenue forward and makes it less predictable for regulators, he said.

“In the past, when early pre-public liquidity wasn’t as prevalent, the tax revenue would come all at once on the IPO and after,” Shad said. “But now it’s kind of up to each company, whether or not they want to do tender offers, how large they want them to be, how often they want to do them.”

Still, tender offers come with a lot of strings attached, such as a percentage cap on how much equity employees can sell. And wildly lucrative tender offers and secondary sales are largely limited to the “best of the best startups,” according to Michael Ewens, professor of finance at Columbia Business School.

What’s more likely to eat into potential tax revenue is employees choosing not to sell at all but rather to take loans instead, said Will Gornall, associate professor of finance at the University of British Columbia.

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By taking a loan against their shares instead of selling them, shareholders save money by paying interest rather than capital gains taxes. This so-called “buy, borrow, die” strategy is employed by SpaceX founder and world’s first trillionaire Elon Musk, who has taken out loans against billions of dollars’ worth of Tesla shares. This strategy also has the benefit of allowing employees to stay invested and benefit from future stock appreciation.

While financial maneuvers to avoid taxes have grown more sophisticated, so, too, have the auditing methods of the California Franchise Tax Board, according to Robert Willens, longtime tax and accounting analyst, who added the agency is notoriously aggressive.

“It really comes down to when the shares are earned. The taxable event is the vesting of the shares, and if you’re a California resident, there’s not much you can do about it,” he said. “I would think that California is looking forward to a really great infusion of funds.”

Of course, IPOs are one-time revenue boosts, and there’s a potential downside to lobbing hefty bills. Ewens told CNBC that he worries a big tax burden may drive these newly wealthy and often entrepreneurial employees away from the state.

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“That’s not a point that California should lower its taxes now, but I think it has to keep in mind that taxes have longer-term consequences for people’s entrepreneurial decision-making, and that’s a big wealth driver in the state,” he said.

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