The New Rules of the Game: What President Trump's Executive Order on College Sports Means for Universities and Businesses

On April 3, 2026, President Trump signed an Executive Order titled "Urgent National Action to Save College Sports," marking the most significant federal intervention into college athletics to date.  Colleges and Universities, as well as businesses engaged in sponsorship deals with college athletes, need to carefully review the Executive Order’s impact. It has the potential to reshape how Name, Image, and Likeness (NIL) deals are structured, who can participate, and what happens if the rules are broken. Here is what you need to know.

A Quick Refresher: How We Got Here

Since the NCAA opened the door for college athletes to profit from their NIL rights in 2021, the landscape has evolved rapidly. Booster-funded organizations known as "collectives" emerged to pool donor money and pay athletes, often with the primary goal of recruiting or retaining talent for a particular school. The June 2025 House v. NCAA settlement then allowed schools to share up to $20.5 million in revenue directly with athletes. Meanwhile, a patchwork of state NIL laws created a maze of differing rules depending on where a school is located.

The result, in the White House’s view, has been an "out-of-control financial arms race" in Division 1 college football and basketball that threatens to drain resources from other sports and undermine the educational mission of college athletics. This Executive Order is the administration's attempt to impose order on the chaos.

What Does the Executive Order on College Sports Do?

The order takes effect on August 1, 2026, and applies to colleges and universities with at least $20 million in annual athletics revenue. It operates on two tracks: (1) It calls on the NCAA to update its rules by the August 1 deadline; and (2) It directs federal agencies to use a school's eligibility for federal grants and contracts as the enforcement mechanism.  Schools that fail to comply with these demands could face loss of federal funding and other penalties.

The order covers a wide range of topics, but the provisions most relevant to universities and businesses fall into a few key categories.

What Is a Fraudulent NIL Scheme Under the Executive Order?

At the heart of the order is a new concept called a "fraudulent NIL scheme." Understanding this definition is critical for anyone involved in athlete compensation.

A "fraudulent NIL scheme" is defined as any arrangement that pays for goods or services, including NIL services, above their actual fair market value in connection with an athlete's participation in college sports, including payments made through collectives or similar entities. If the money an athlete receives is more than what their name, image, and likeness are actually worth on the open market, and the deal is connected to their role as a college athlete, the order treats that arrangement as fraudulent.

What NIL Payments Are Still Allowed Under the Executive Order?

The order carves out two categories of payments that are not considered fraudulent:

University revenue sharing. Payments that a school makes directly to an athlete under a revenue-sharing program are permissible, as long as those payments comply with the NCAA's rules (including the framework established by the House settlement). This means the formal, above-board revenue-sharing programs that many schools have adopted or are implementing likely remain on solid ground.

Legitimate third-party sponsorship and endorsement deals. This is the exception that matters most for businesses seeking to enter into NIL sponsorship arrangements. A company can still pay a college athlete for an NIL deal, but the arrangement must meet several conditions:

• The paying company must be a genuine third party that is not affiliated with the school's athletic department. A local business that wants to hire a college quarterback for a social media campaign is fine; a booster collective that exists primarily to funnel money to athletes at a particular school is not;
• The deal must involve a valid business purpose related to promoting or endorsing goods or services offered to the general public for profit. The athlete needs to be doing real promotional work, such as appearing in ads, posting on social media, or making appearances;
• The compensation must be at rates comparable to what a non-athlete with similar name recognition, social media following, or public profile would earn for the same type of work. This is the order's practical fair market value test. If a college volleyball player has 50,000 Instagram followers, the question is whether a non-athlete influencer with a similar following would command similar pay for the same kind of promotion; and
• The deal cannot be tied to the athlete's participation at a particular school. A national brand paying an athlete to endorse its product is fine. A deal structured as an inducement for an athlete to attend, transfer to, or remain at a specific university is not.

How Does the Executive Order Affect Colleges and Universities?

Universities face the most immediate compliance pressure. The order defines several categories of "improper financial activities" that could put a school's federal funding at risk. These include intentionally participating in a fraudulent NIL scheme, knowingly accepting contributions from people who participate in such schemes, using federal funds for NIL or revenue-sharing payments (or for coaching compensation), and interfering with another school's contractual relationship with an athlete.

The enforcement mechanism is significant: federal agencies that provide grants or contracts to universities are directed to evaluate whether violations of these rules should affect the school's eligibility for federal funding. The Office of Management and Budget is tasked with issuing guidance on suspension and debarment procedures, and the General Services Administration is directed to establish compliance monitoring and data collection.

For university leaders, this means the conversation about NIL compliance is no longer confined to the athletic department. It now involves the provost's office, the general counsel, and anyone responsible for the institution's federal funding relationships. Schools should be reviewing their relationships with NIL collectives, assessing their compliance policies, and documenting their analysis carefully.

The order also calls on the NCAA to implement rules limiting athlete eligibility to a five-year window, restricting athletes to one unrestricted transfer with immediate playing eligibility (with a second free transfer available only after earning a four-year degree), and barring professional athletes from returning to college competition. Revenue-sharing programs must preserve or expand scholarships and opportunities in women's and Olympic sports. Schools are also expected to provide medical care for athletes during enrollment and for a reasonable period afterward.

Can Businesses Still Sign NIL Sponsorship Deals With College Athletes?

For businesses interested in sponsoring college athletes, the order is not a death knell, but it does impose guardrails. The good news is that the order expressly protects legitimate endorsement and sponsorship deals. If your company wants to pay a college athlete to promote your products, you can still do so, provided you follow the rules.

Here is a practical checklist for businesses:

Keep the deal independent. Your company should not be acting as a conduit for a school's athletic department or a booster network. The sponsorship should be a genuine arm's-length business transaction between your company and the athlete.

Make sure the work is real. The athlete should be performing actual promotional services — social media posts, appearances, product endorsements, commercial shoots, or similar activities. Deals that lack any meaningful promotional component are vulnerable to being characterized as disguised pay-for-play arrangements.

Benchmark your compensation. Before signing a deal, consider what you would pay a non-athlete with a comparable public profile for the same type of promotional work. Documenting this analysis will be important if your deal is ever scrutinized.  Various services that rank the NIL value of college athletes (such as On3) may also provide useful support. 

Do not tie the deal to the athlete's school. Your sponsorship agreement should not require or incentivize the athlete to attend, transfer to, or stay at a particular institution. Structure the deal around the athlete's personal brand and your company's marketing objectives, not around the athlete's enrollment at a specific school.

Document everything. In a more regulated environment, good records matter. Keep documentation of your valuation analysis, the business purpose of the deal, the services the athlete is expected to perform, and the comparable rates you considered.

Will the College Sports Executive Order Actually Take Effect?

The Executive Order will certainly face legal challenges, and it is far from certain whether it will actually go into effect on August 1, 2026 as scheduled. Many commentators believe the order's primary purpose is less about directly governing college sports and more about pressuring Congress to pass legislation — particularly the SCORE Act — that would provide the NCAA with an antitrust exemption and establish a durable national framework. NCAA President Charlie Baker acknowledged as much, calling the order "a significant step forward" while stressing that "stabilizing college athletics for student-athletes still requires a permanent, bipartisan federal legislative solution."

The August 1, 2026 effective date is approaching quickly. Whether or not the order survives legal challenge, the compliance expectations it establishes are likely to influence how the NCAA, schools, and businesses operate for the foreseeable future. Now is the time to review your practices and ensure they align with this evolving framework.  

The attorneys of Sands Anderson are closely following these developments and are ready to assist clients trying to navigate these changes. If you have any questions about NIL deals, please contact Brian Muse. 

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