Common Hockey Misconceptions: One-way and Two-way Contracts

This is the second in a series of short explanations of common misconceptions about hockey and the NHL. Check the blog for the previous edition on offer sheets, and follow for future updates on all sorts of topics.

Again, the offseason brings constant talk of contracts and with that comes talk of one-way and two-way contracts. As happens every year, NHL fans continue to demonstrate a complete lack of understanding of what these terms mean.

 

What It Is: The difference between a one-way and two-way contract is that a one-way contract means a player is guaranteed their full salary no matter what league they play in. A two-way contract features one salary at the NHL level and a smaller salary at any minor league level. That’s it, that’s all.

 

Misconception One: One-way/Two-way Contracts Affect Waiver Eligibility. Again, and hopefully for the last time, one-way and two-way contracts have ZERO effect on waiver eligibility. I believe the EA NHL games are responsible for this fallacy. A player’s waiver eligibility is the result of a set of rules surrounding their years of service and games played. Here’s a link to explain it.

https://www.capfriendly.com/waivers-faq

A player on a one-way contract can go on waivers, and so can a player on a two-way.

I’ll make a post later this week about some other waiver-related misconceptions.

 

Misconception Two: One-way/Two-way Contracts Don’t Affect the Salary Cap. This misconception is mostly true. It’s true that whether a contract is one-way or two-way has no direct effect on the salary cap, but they can affect it indirectly. Teams can only stash up to $925,000 of a contract in the minors, the rest must remain on the salary cap. Two-way contracts are therefore slightly more cap friendly. The non-NHL portion of the salary would almost certainly be under $925,000, but this would only help in the rare case where they feature an NHL salary over $925,000.

 

Misconception Three: Only Young Players Sign Two-Way Contracts. Some think that two-way contracts are something that only young players sign. It is true that all entry-level contracts are automatically two-way, but that doesn’t mean two-way contracts are limited to the newly-drafted. Veteran players sign two-way contracts all the time, especially if they’re expected to play the majority of the season in the AHL. This can actually give teams with deep pockets an advantage in drawing AHL veterans to their farm clubs, as they can offer decent salaries even on the low-side of a two-way contract. For example, Blair Jones signed a deal with the Vancouver Canucks last year that gave him $575,000 at the NHL level and $250,000 at the AHL level, still a decent chunk of change.

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