A two-way contract is a binding agreement concerning professional athletes, which states that an athlete's salary depends on what league he is assigned to play in. It is the opposite of a one-way contract, which states that the athlete's salary remains the same, irrespective of what league he plays in.

Two-Way Contracts in Hockey

Professional hockey players entering the NHL as first-timers usually sign a two-way, entry-level contract with a team. These contracts specifically state that they'll be paid better salaries if assigned to play with the NHL team, and will receive poorer salaries if assigned to play for a minor league like the ECHL or American Hockey League.

There's a common belief that a player who is bound by a one-way contract is expected to play exclusively in the NHL. That is true because an organization considers its players under one-way contracts to be good enough to play in the NHL. They also don't want to pay NHL-level salaries to players who are not in the NHL.

How a Two-Way Contract Works in Hockey

For the sake of illustration, let's say that a blueliner was awarded a one-way contract for one year worth $874,125. If the Bolts wanted him to go to the AHL and he successfully clears waivers, he would still earn $874,125 with Syracuse Crunch, the Tampa Bay Lightning's AHL affiliate. A two-way player isn't qualified for a 10-day contract. However, if he's released from his two-way contract, he qualifies to sign a 10-day contract with any team.

In a two-way contract, salaries associated with a player are of two different kinds. The kind the player receives depends on whether the player is on an organization's NHL roster or AHL roster. A player, for instance, was signed to a two-way contract for one year. So, playing with the Crunch will earn him an annual salary of $70,000 and playing with the Bolts will earn him an annual salary of $874,125. Bear in mind that these two amounts are fixed, depending on how long he spends and where.

Waiver Restrictions

Waiver restrictions apply to two-way contracts but vary from contract to contract. A player can freely alternate between the Lightning and the Crunch as the need arises because he's not old enough or hasn't reached the experience level where a waiver restriction applies. On the other hand, if a player who is old enough and experienced enough was to be reassigned to Syracuse from the Lightning, he would be required to clear waivers before reassignment because of his age and experience level.

Two-Way Contracts in Basketball

The NBA D-League was changed to the G League in 2017, and with that change of title, other slight differences were introduced into the world of basketball. Maybe the most significant of them all was the highly expected addition of two-way players to the NBA. A two-way player is a member of both the parent club in the NBA and the G League team.

When a player signs a two-way contract for one or two years, the player can spend as many as 45 days with the NBA team. Within the 45-day period that a player is on the roster of the NBA, he earns an NBA-level salary. However, that changes and he earns a G League-level salary when he joins the minors

In the past, G League players were typically called up during the second half of the season, when 10-day contracts could be signed in January. Now, they can be invited up and down as often as there is a need within the limits of their 45-day NBA tenure.

Benefits and Limits of a Basketball Two-Way Contract Player

Summarily, the following will be true of a player who signs a two-way contract:

  • He'll be on both the G League and NBA teams.
  • He'll enjoy guaranteed payments, but there's no contract security because he can be replaced by another two-way player at any time.
  • He can spend as long as 45 days on the roster of the NBA while earning an NBA salary.
  • He can't sign a 10-day contract.
  • He can be invited up and down as many times as the need arises within the limits of his 45-day NBA tenure.

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