Key takeaways

• Two-way contracts allow players to move between major and minor leagues while earning different salaries based on assignment.
• These contracts are used to develop young talent, offer roster flexibility, and reduce long-term financial risk for teams.
• As two-way deals grow in importance, digital tools like Signeasy help streamline contract management with faster execution, compliance, and collaboration.

In professional sports, player contracts take many forms, each designed to balance team strategy, player development, and salary cap management. Two-way contracts have emerged as a flexible, hybrid solution that bridges the gap between major league rosters and their developmental affiliates.

Originally introduced in leagues like the NBA and NHL, two-way contracts offer teams a strategic way to invest in promising talent while giving players a unique pathway to prove themselves at the highest level.

But how exactly do these contracts work, and why are they becoming more important in the current sports landscape? This article breaks down the mechanics of two-way contracts, explores their key features, and highlights the mutual benefits they offer to both teams and players.

What is a two-way contract?

A two-way contract is a type of professional sports agreement that allows a player to split time between a major league team and its minor league affiliate.

Under this arrangement, the player earns different salaries depending on where they’re assigned, typically a higher salary when with the major league team and a lower one when playing in the minors. This type of contract provides teams with added flexibility and gives developing players a clear path to earn playing time at the highest level.

Two-way contracts were first introduced in the NBA in 2017 as part of a collective bargaining agreement aimed at strengthening the league’s developmental system, the G League.

The NHL has had a version of two-way contracts for much longer, though the salary structure and usage differ slightly between the two leagues.

In both cases, the core idea remains the same: players under two-way deals can be moved up or down without being exposed to waivers (in certain cases), and their pay adjusts accordingly.

Here’s what two-way deals look like compared to standard player contracts, often called one-way contracts:

How do two-way contracts work?

Two-way contracts are designed to create a fluid connection between a team’s major league roster and its minor league affiliate. Here’s a breakdown of how they function in practice:

Movement between leagues

Players on two-way contracts can move back and forth between the major league and the minor league affiliate without needing to clear waivers (in most cases). This flexibility allows teams to:

• Call up players for injury replacements or short-term needs
• Send players down for more playing time or development
• Manage roster depth efficiently throughout the season

Salary structure

A defining feature of two-way contracts is their dual salary system:

• When in the major league (like the NBA or NHL), the player earns a prorated portion of the league minimum salary (or close to it). For example, an NBA two-way player earns significantly more for each day spent on the NBA roster.
• When in the minor league (like the G League or AHL), the player earns a much lower base salary, often closer to typical minor league rates.
  

This pay model reflects the player's assignment at any given time, rewarding major league appearances while keeping minor league costs manageable for teams.

Time limits and game caps

Two-way contracts often come with restrictions on major league participation:

• In the NBA, players on two-way contracts are limited to 50 regular-season games with the NBA team. They are not eligible for the playoffs unless their contract is converted to a standard NBA deal.
• In the NHL, while the contract is called "two-way," it refers primarily to salary, not time limits. NHL players can move freely between the NHL and AHL, but they may be subject to waivers depending on age and experience.
  

These limitations ensure that two-way contracts serve their purpose: allowing young or developing players to gain exposure at the top level while still growing in the minors.

In short, two-way contracts offer the best of both worlds: development in the minors with a foot in the door of the big leagues, all while giving teams the flexibility to manage evolving roster needs.

Key features of a two-way contract

Here are the core features that define how these agreements operate:

1. Dual-salary scale: Players earn a higher salary when playing with the major league team and a lower salary when assigned to the minor league affiliate.

2. Limited active roster eligibility: Two-way players have restrictions on how many games they can play at the major league level unless their contract is converted.

3. Player development focus: These contracts are designed to give young or developing players consistent minutes in the minors while offering exposure to the major league environment.

4. Short-term duration: Most two-way contracts last for one or two seasons, giving both the player and team flexibility.

5. Conversion potential: Teams can upgrade a two-way contract to a standard major league deal if a player performs well, making it a pathway to a full-time roster spot.

6. Eligibility limits: Only players with limited years of professional experience (typically four or fewer) are eligible to sign two-way contracts, ensuring they’re used for developmental purposes.

Why teams and players benefit from two-way deals

Two-way contracts create a win-win scenario for both professional teams and aspiring players. They offer flexibility, opportunity, and strategic value on both sides of the agreement.

For teams

• Roster flexibility: Teams can move two-way players between the major and minor leagues without committing a full roster spot or dealing with waivers (depending on league rules), giving them more agility during the season.
• Cost-effective talent development: Two-way deals allow teams to invest in young, promising players at a lower cost than a standard major league contract, making them an efficient way to build future depth.
• Reduced risk: Since two-way contracts come with lower salaries and short terms, teams can evaluate a player’s potential without long-term financial commitment. If a player doesn’t pan out, the downside is minimal.

For players

• Opportunity to prove themselves: Two-way deals give players meaningful chances to showcase their skills in both the minor and major leagues; it’s often the stepping stone to a full-time roster spot.
• Higher earnings potential: Players on two-way contracts earn significantly more than they would on a G League or AHL-only contract, especially for the time spent at the major league level.
• Access to elite coaching and systems: Even when not in the big league full-time, two-way players benefit from working within the organization’s system, often attending practices, training camps, and meetings with the major league team.

Real-life success stories

Two-way contracts are often seen as stepping stones, and for some players, they’ve been the launchpad to full-time NBA careers. So we went looking for some of the top names in the sport who prove that two-way contracts are more than just developmental placeholders.

According to a Reddit community of NBA fans, these are the top favorites:

1. Austin Reaves (Los Angeles Lakers)

Undrafted in 2021, Reaves signed a two-way deal with the Lakers and quickly impressed coaches with his basketball IQ, shot-making ability, and defensive effort. Before the season even began, the Lakers converted his contract to a standard NBA deal, and he has since become a reliable starter and playoff performer, solidifying his role in the team's long-term plans.

2. Caleb Martin (Miami Heat)

Martin began his NBA journey with a two-way contract after being waived by the Hornets. The Miami Heat saw potential in his athleticism and two-way play, and he made the most of the opportunity. After excelling in spot minutes, Martin earned a full contract and eventually played a crucial role during the Heat’s 2023 playoff run, helping them reach the NBA finals.

3. Alex Caruso (Los Angeles Lakers)

One of the most well-known two-way success stories, Caruso went undrafted in 2016 and bounced between the G League and the NBA under a two-way deal. His tough defense, hustle, and smart play earned him a full-time role with the Lakers, culminating in a key rotation spot on the 2020 NBA Championship team. He later signed a multi-year contract with the Chicago Bulls.

4. Jose Alvarado (New Orleans Pelicans)

Known for his relentless energy and disruptive defense, Alvarado signed a two-way deal with the Pelicans in 2021. He quickly became a fan favorite thanks to his signature "sneaky steals" and impactful bench minutes. In his rookie year, the Pelicans converted his contract to a standard four-year deal, rewarding his impact and upside.

5. Lu Dort (Oklahoma City Thunder)

Dort joined the Thunder on a two-way contract after going undrafted in 2019. His defensive intensity and strength immediately stood out, particularly in his matchups against elite scorers. After a breakout performance in the 2020 NBA playoffs, Dort earned a full NBA contract and has since become a core defensive anchor for OKC.

The evolving future of two-way agreements

As professional sports continue to evolve, so too do the structures that support player development and team building. Two-way contracts, once seen as niche tools, are becoming more central to roster strategy. They’re being driven by changes in league rules, salary dynamics, and a growing emphasis on talent pipelines.

1. Changes in collective bargaining agreements (CBAs)

Recent updates to league CBAs, especially in the NBA, have expanded the role of two-way contracts. The NBA’s 2023 CBA increased the number of allowable two-way roster spots from two to three per team, giving franchises more flexibility in developing young players.

These changes reflect a broader shift toward protecting and nurturing emerging talent, especially as teams look for cost-effective ways to build depth in a competitive landscape. 

2. Rising salary caps and their impact

With league revenues growing, salary caps are steadily increasing, and that affects how teams approach contract structures. Two-way salaries have risen accordingly, narrowing the gap between developmental deals and full-time contracts.

As financial incentives improve, two-way contracts are becoming more attractive to undrafted players or late-round picks, who may once have sought international deals or standard G League contracts instead.

3. Adaptation to player development deeds

Modern teams are placing more emphasis on long-term player development, and two-way agreements are a key part of that strategy. Many franchises have created stronger ties between their major and minor league coaching staffs, aligning systems and playbooks to make transitions smoother.

Some teams now treat their G League or AHL affiliate as an extension of their main roster, using two-way players in real-time experiments that inform major league decisions.

The future of two-way agreements is bright. They’re no longer just a stopgap; they're an essential part of the modern development ecosystem, helping teams remain competitive while offering players a clearer, more supported path to the top.

How Signeasy streamlines two-way contracts

As two-way contracts grow in complexity and importance, so does the need for a fast, secure, and compliant way to manage them. That’s where Signeasy comes in.

Here’s how Signeasy can help sports organizations, agents, and athletes streamline the two-way contract management process:

• Faster turnarounds: Two-way deals often require quick execution, especially when players are moving between leagues midseason. Signeasy enables instant, mobile-friendly signing so contracts can be finalized on the go.
• Built-in compliance: With evolving CBA regulations and cross-border legal considerations (especially in leagues like the NHL), Signeasy ensures that documents are signed with legally binding eSignatures and meet industry-standard compliance, including ESIGN and eIDAS.
• Secure contract management: All agreements are stored in a centralized, encrypted repository, making it easy for front offices, agents, and legal teams to access, track, and audit contract activity.
• Seamless collaboration: Signeasy allows multiple stakeholders (like GM, coach, agent, or league official) to review and approve documents in a smooth, trackable workflow. No back-and-forth emails needed.
• Integration ready: Signeasy integrates easily with popular tools like Google Workspace, Microsoft 365, and cloud storage solutions, making it a natural fit within any sports organization’s digital ecosystem.

Conclusion

Two-way contracts may not always make headlines, but they play a pivotal role in shaping team rosters, player careers, and the future of professional sports.

For fans, understanding how these deals work offers deeper insight into team strategy and player development. For agents, it’s a tool to navigate early career opportunities and maximize client value. And for aspiring players, it represents a clear, attainable path to the big leagues.

As these contracts continue to evolve, staying informed and having the right tools to manage them will be key to staying ahead.