New Executive Order Targets NIL and Athlete Mobility—With Federal Funding on the Line

The April 3, 2026 executive order Urgent National Action to Save College Sports marks a significant escalation in federal involvement in intercollegiate athletics, moving beyond prior policy guidance to an enforcement-driven framework that ties college athletics practices—particularly NIL activity—to federal funding eligibility.

Building on a July 2025 executive order that introduced federal “guardrails” around athlete compensation, the new order seeks to impose national standards governing eligibility, transfers, NIL arrangements, and revenue sharing, while targeting perceived abuses by collectives and limiting the influence of disparate state laws.

The bottom line: colleges and universities, collectives, and investors now face heightened regulatory risk, potential federal enforcement, and immediate compliance pressure ahead of the order’s August 1, 2026 effective date. And Congress is on the clock, with the president setting a deadline for lawmakers to finally act to remove the NIL issue from the courts and codify a national NIL framework into law.

THE JULY 2025 EXECUTIVE ORDER

President Trump’s July 24, 2025 executive order, Saving College Sports, represented the federal government’s first major intervention in the modern NIL era. It articulated policy priorities aimed at stabilizing college athletics, including:

• Preserving women’s and Olympic sports
• Encouraging revenue-sharing models that do not reduce nonrevenue opportunities
• Limiting pay-for-play NIL arrangements while permitting fair market value compensation
• Calling for exploration of national standards and potential federal legislative solutions

Notably, the 2025 Order largely relied on policy direction and agency study, without imposing concrete enforcement mechanisms. For more information on the Saving College Sports order, see our July 2025 LawFlash.

NEW APRIL 2026 EXECUTIVE ORDER

The new order operationalizes—and significantly expands—these earlier principles by creating enforceable standards and federal oversight mechanisms:

Regulation Through Federal Funding and Procurement Authority

The order directs federal agencies that provide grants or contracts to universities to evaluate compliance with intercollegiate athletics rules—including NIL, eligibility, transfers, and revenue sharing, as described below—as part of assessing institutional responsibility. The Office of Management and Budget (OMB) and General Services Administration (GSA) are tasked with implementing guidance, and noncompliance may trigger suspension or debarment from federal funding programs.

Eligibility and Transfer Limits

Against the backdrop of extensive ongoing challenges to National Collegiate Athletic Association (NCAA) eligibility and transfer restrictions, which we discuss in detail in our March 3, 2026 LawFlash, the order encourages the development of national rules (through an interstate athletic governing body) that would rein in athlete mobility and promote competitive balance and academic continuity, including by:

• Limiting participation in college athletics to five years, with narrow exceptions
• Prohibiting former professional athletes from returning to college competition
• Restricting transfers to one immediate-eligibility transfer and/or one additional transfer after four-year degree completion
• Aligning transfer timing to avoid interference with athletic seasons or otherwise undermining the integrity of competitions
• Prioritizing academic development and graduation

NIL Regulation and Restrictions

The order seeks to operationalize core elements of the House Settlement by eliminating pay-for-play structures while preserving a narrower market-based NIL framework that is limited to fair market value compensation for legitimate commercial purposes, independent of institutional affiliation.

To accomplish this, the order prohibits federally funded colleges and universities or their officers, agents, affiliates or representatives from engaging in “improper financial activities,” which are defined to include:

• Participation in “fraudulent NIL schemes” (i.e., above-market compensation tied to athletic participation)
• Knowingly accepting contributions (financial or otherwise) from persons such as collectives and boosters who have engaged in fraudulent NIL schemes
• Using federal funds for NIL or revenue-sharing payments
• Interference with a student-athlete’s contract with another college or university

Revenue Sharing Oversight

The order also seeks to prevent revenue concentration in football and basketball from undermining broader athletic programs as well as broader college and university financial abilities to provide research needed by the Department of War, Department of Health and Human Services, and National Science Foundation.

To achieve this, the order contemplates revenue-sharing models between institutions and student-athletes but requires that such models preserve or expand opportunities in women’s and Olympic sports and avoid reallocating resources in ways that reduce scholarships or participation opportunities.

Regulation of Collectives, Agents, and Third Parties

Working to increase accountability and reduce perceived abuses in the NIL marketplace, the order targets third-party actors by prohibiting improper NIL activity facilitated by collectives or similar entities, calling for a national student-athlete agent registry, and protecting student-athletes from excessive agent commissions.

The Order also calls on the Federal Trade Commission (FTC) to enforce existing consumer protection laws against agents and related actors in an effort to curtail misleading NIL deals, deceptive recruiting inducements, and fraudulent promises made to student-athletes.

Federal Preemption and Litigation Strategy

The order further seeks to replace the current patchwork of state NIL laws with a more uniform national framework. Specifically, the order directs the Attorney General to challenge state laws that conflict with existing NCAA and College Sports Commission (CSC) rules and discriminate against out-of-state commerce, burden interstate commerce, and/or interfere with contractual relationships, in each case in a manner that violates the Constitution or is invalid under federal law.

IMPLICATIONS FOR KEY STAKEHOLDERS

• Colleges and Universities face significant new risk exposure as their athletic department’s practices may affect federal grant and contract eligibility. To mitigate this risk, colleges and universities should promptly reassess NIL policies and oversight, relationships with collectives, and recruiting and transfer policies. There is likely to be increased Title IX and resource allocation scrutiny, making it a good idea to review Title IX policies and existing practices for resource allocation (particularly in the NIL era) to ensure compliance. Finally, colleges and universities will have to find ways to absorb the potential new operational burden associated with compliance.
• NIL Collectives, Sponsors, and Brands may face substantial regulatory risk under the order’s “fraudulent NIL scheme” standard requiring that compensation structures align with fair market value and bona fide commercial activity. Given the increased likelihood of federal enforcement, including FTC scrutiny, NIL collectives, sponsors, and brands should reassess existing relationships with institutions and athletes with the new threat of federal enforcement in mind.
• Private Equity and Investors face heighted regulatory and enforcement uncertainty across college athletics investments. This requires increased diligence around NIL compliance, revenue-sharing structures, and institutional funding dependencies, and necessary changes may impact valuation, deal structuring, and exit strategies.
• Student-Athletes may now be entering a more regulated NIL environment with constraints on existing compensation structures and limits on eligibility to compete, transfer flexibility, and consequently earning opportunities.

LOOKING AHEAD

The order initiates a multiagency process likely to produce guidance, proposed regulation, potential federal enforcement actions, and perhaps congressional action to create a national NIL framework and stabilize college sports.

These developments will unfold alongside active litigation, the evolution of state law, and continued efforts by the NCAA and CSC to reign in prohibited pay-for-play deals and enforce the revenue-sharing deal implemented by the House Settlement, increasing (at least in the short term) an already dynamic and uncertain regulatory environment.

Stakeholders should consider comprehensive legal risk assessments across antitrust, consumer protection, labor, and NIL compliance functions in light of both regulatory signals and judicial trends, including consideration of the following actions:

• Conduct a comprehensive NIL compliance review to assess alignment with fair market value and commercial purpose standards
• Evaluate relationships with collectives, agents, and third parties for potential exposure under the order’s “improper financial activities” framework
• Assess federal funding risk, particularly for institutions with significant grant or contract portfolios
• Review transfer, recruiting, and eligibility practices in light of the existing litigation landscape and in anticipation of new national standards
• Prepare for enhanced reporting obligations, including financial and roster disclosures
• Monitor regulatory developments and agency guidance from the OMB, GSA, Department of Education, and FTC
• Continue to engage with congressional stakeholders on legislative efforts to provide predictable and durable rules for college sports