The NBA and NBPA agreed to a new Collective Bargaining Agreement (CBA) effective July 1, 2017. A major change to the CBA is the addition of two-way contracts. These new contract options could set a precedent for a true minor league system and they allow additional opportunities for players to be developed by NBA clubs while earning a higher salary than a standard G League player.

This is new ground for both leagues and as such the team here at 2 Ways and 10 Days want to provide you with the details of these contracts.

Which players are eligible for a two-way contract?

Any player with four years or fewer of NBA service.

Years of service is the important denominator. Players who have participated in an NBA training camp, but were later waived have not accrued any years of service. Players who have been out of the NCAA ranks for three or more years, but have accrued less than three years of NBA service would also be eligible.

Teams will likely use these contracts to secure young, undrafted players with some upside, however they could utilize them to entice more talented — and proven — players to return from overseas as well.

What is the duration of a two-way contract?

Players can either sign for one or two years under two-way contract provisions, with the exception being players entering their third year of NBA service as they can only sign a one-year deal. At the end of contract, the NBA team will have the right to tender a qualifying offer to the player should they choose to do so.

This is uncharted waters, so it’s difficult to decipher how many players will agree to a two-year deal over a one-year offer. There’s no incentive for the player other than the potential to earn the maximum salary of $385,000 for two years instead of one. However, if players opt to sign these two-way offers, expect to see most sign a one-year deal so they have ample opportunity to capitalize on their play the following offseason.

Do players signed to two-way contracts count toward the 20-player maximum allowed for NBA training camps?

Yes.

NBA teams retain max of 15 players on their standard roster. If a team has all 15 spots filled and max amount of two-way contract players (2) in camp, then they could have three affiliate players at most sent to G League team after camp — max affiliate players allowed is four.

Does a two-way contract count against the NBA team’s salary cap?

No. Teams do not need cap room to sign a two-way player.

This can help teams without much cap space add some additional talent without hurting their bottom line.

Can NBA teams without a G League affiliate utilize two-way contracts?

Yes. The three teams without a G League affiliate — Portland Trail Blazers, Denver Nuggets and New Orleans Pelicans — can still sign players to two-way contracts. When they assign them to the G League they will use the flex assignment rule.

Flex Assignment Rule — Upon receipt of an assignment from an independent NBA team, the NBA G League will identify any NBA G League team willing to accept the assigned player. The assigning independent NBA team will then choose the destination for assignment between those teams. If no NBA G League team is willing to accept the assigned player, he will be assigned to one of the hybrid affiliate teams pursuant to a lottery.

This could get really interesting, because teams with an affiliate will presumably have four affiliate players from camp and two of their own two-way players which comes to six of their 12-man roster (only 10 active). Most NBA teams — if they assign both of their two-way players at the same time — will likely try to have them assigned to the same team, so a couple G League teams could stockpile some major talent. Obviously this potentially hurts players who are signed directly with the league, because if teams are willing to take a flex player, then they will likely get solid minutes as well.

Can other NBA teams call up players on two-way contracts?

No. Players on two-way contracts have their NBA rights owned by the team they signed that contract with.

This is new protection for teams, but will limit the player’s opportunities in essence. If their team doesn’t need their services that season, then they might not get called up, or if they are then they might not see meaningful minutes in the NBA. This is the trade off players have to gamble with — take the likely $275,000 and potentially limit opportunities or roll the dice and hope for a call up elsewhere.

What is the maximum amount of players on two-way contracts one team can have?

Two. Each team can have a maximum of two players on a two-way contract at any one point in time.

These contracts are designed to fill roster positions 16 and 17 for an NBA club. Sometimes teams will carry less than the maximum 15 roster spots allowed, but doing this does not mean you can then sign more two-way players than the allotted two for each team. Teams are not required to carry two two-way contracts, but that is the absolute maximum they are allowed to carry at one time.

What is the earning power of these contracts?

Players can earn a maximum of approximately $385,000* per season, if maximum requirements are met. A player on a two-way contract can spend a maximum of 45 days with their NBA team. During their time in the NBA, players will earn 1/170 of the rookie minimum contract per day, regardless of previous NBA experience. The minimum a player can earn is $75,000 if they are not called up for a single day to their NBA club.

*This reflects a salary increase for the 2018–19 season.

A player an NBA team wishes to sign via a two-way contract can receive $50,000 in training camp, a figure paid by the NBA G League and not a salary cap hit against the NBA club. This figure is also not in addition to their $75,000 salary in the G League as a two-way player. Any player who signs for more than $50,000 in training camp is not eligible for that team’s NBA G League affiliate.

The important note here is the $385,000 figure is not guaranteed. That figure can be earned if said player spends the entire allocated amount of days (45) with their NBA team. The inaugural year of two-way contracts (2017–18 season) will be important in setting the tone for how teams handle the salary figure. Many agents with opt for some sort of “handshake agreement” that their player will indeed be brought up for the maximum amount of days to ensure full earning potential. NBA teams who do not follow this line of thought risk losing out on future two-way players altogether.

What happens if a player outperforms their two-way contract?

Any two-way contract can be converted to a standard (NBA minimum based on years of experience) contract at the team’s option. In lieu of converting a two-way contract to a standard NBA contract, teams and players can negotiate and sign a standard NBA contract. If a new contract is signed, the two-way contract becomes null and void.

The caveat here is the NBA team must have an open roster spot, or create one by waiving another player on their 15-man roster. The two additional roster spots are for two-way players only, so teams cannot simply sign an additional player or two and have 17 standard NBA contracts on their books.

If a team waives a two-way player midseason, can they sign another one?

Yes. However a player signed mid-season will have a prorated amount of NBA days to use. So, if he’s signed exactly halfway through the season, then he could get 22–23 days with the NBA club (not the original 45 a player gets if they sign before the season).

How teams will utilize these deals mid-season is yet to be seen. Some will certainly be waived, while some may be converted to standard NBA contracts. Either option will open another spot for a new player to potentially get an NBA look.

If a two-way contract player is waived, does that team’s G League affiliate retain their rights?

Yes. These players would go to the NBA club’s G League affiliate as an in-season affiliate player as long as they appeared in at least 10 games for the G League team AND that team didn’t use their max of 4 affiliate players to that point. For this to happen the player must sign their G League contract immediately after clearing NBA waivers, there is no grace period.

After NBA training camp, teams can designate up to 4 players as affiliate players and route them to their G League affiliate. Players who make more than $50,000 in training camp will not be eligible as an affiliate starting in the 2017–18 season. Not all teams use the maximum 4 players allotted, just in case instances like an in-season affiliate may happen down the road.

Can players on NBA rosters be converted to a two-way contract?

Yes. If a standard NBA contract includes an attachment called Exhibit 10, the team has the right to convert the contract to a two-way contract. To be eligible for an Exhibit 10 attachment, a contract must be for one season at the minimum salary with no bonuses of any kind. A team can only add the Exhibit 10 attachment if they have their own G League affiliate. This conversion must be done prior to the start of the NBA’s regular season.

This is certainly an added wrinkle. Players who sign one year minimum deals in the offseason and don’t perform well in camp, or get injured, may be converted to a two-way contract.

Is there a deadline for signing players to a two-way contract?

Yes, the deadline is January 15 each season.

Not every NBA team will fill both two-way roster spots at the beginning of the season. They could hold off to see how certain players perform in the NBA G League and/or overseas and then make an offer for certain players. This deadline comes 10 days after the point in the season where teams can offer 10-day contracts as well.

Do players on two-way contracts accrue Bird rights?

Yes. Players accrue Bird rights (toward free agency) while on two-way contracts, and they are subject to restricted free agency at the end of their contracts if they were called up by the parent NBA team for at least 15 days of the previous season.

Bird rights allow teams to go over the cap to retain certain players. While two-way contract players might not initially seem like a pivotal player to a team’s future success, a diamond in the rough could be discovered and these rights could certainly be beneficial. Think of a player like Jonathon Simmons for the San Antonio Spurs — when initially signed they likely did not expect him to morph into the amazing role player he is now. These benefits will come in handy for situations like this.

Can players on two-way contracts be traded?

Yes. However, they cannot be traded for 30 days after they are signed, and trades of two-way players do not generate trade exceptions for the parent team.

This detail seems minor but teams sometimes include “throw in players” to sweeten the pot on a trade proposal. Adding a young player on a two-way contract to a trade isn’t likely to make or break the trade, but could allow for some wiggle room one way or the other. Also, think of the amazing hindsight reactions if a player on a two-way contract is traded and becomes a vital piece down the road for their new team.

Are there days that do not count toward the 45 day maximum?

Yes. If a player provides one or more NBA days of service before the first day of any NBA G League training camp or after the final game of the player’s team’s NBA G League Regular Season, such day(s) will not count toward the 45-Day Two-Way Service Limit, per the CBA.

This is important and has been overlooked by many. The NBA G League regular season ended April 1 during the 2016–17 season and the NBA regular season ended April 12. Those additional days when the two-way player would presumably be brought back to their NBA club, do not count toward the 45-day maximum. Also, any time spent with their club during the NBA playoffs would not count according to the language in the new CBA. However, during this buffer zone, if with their NBA team, a two-way player would still earn a prorated share of the NBA minimum contract which increases their earning potential.

Can a two-way contract player appear in NBA playoff games?

No, a two-way player cannot appear on the NBA team’s playoff roster or play in a playoff game, but he can be on the inactive list during playoffs to travel and practice with the team.

What if a two-way contract player gets injured?

The player can rehab with their NBA club and it’s medical staff, and as long as they don’t participate in team activities (film study, practice, etc.) then these days do not count towards their 45-day maximum.

Teams have some flexibility here. Depending on how long the player will be out, the team may choose to count their days toward the 45-day max, so that player reaches the maximum earning potential of their deal. If the player is out only a partial part of the season, then they may opt to save those 45 days for when the player is healthy and can contribute to the NBA club in some capacity. There is a ton of gray here.