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How the NBA's new 2-way contracts work and why some agents are worried about them

The new two-way contracts are great for teams but worse for most players. Let agents explain why.

2017 Las Vegas Summer League - Sacramento Kings v Milwaukee Bucks Photo by Ethan Miller/Getty Images

LAS VEGAS — This coming season, the NBA will employ 60 more players than ever before. Don’t take my word for it: You’ll likely hear this fun fact oversaturate NBA television broadcasts almost as frequently as you’re reminded that the NBA replay center is based in Secaucus, N.J.

In the new collective bargaining agreement, the league has introduced two new roster slots where teams can sign players to “a two-way contract,” which allows them to spend a finite amount of time with their respective NBA team and the rest of their season with a G-League affiliate.

So far, 11 such contracts have been officially announced, and both Milwaukee (Wisconsin’s Bronson Koenig and Utah State’s Jalen Moore) and Washington (Florida’s Devin Robinson and Pittsburgh’s Michael Young) have already filled both spots. On the surface, it seems like a win for everyone involved.

Except, maybe, for the players themselves.

A couple of agents I spoke to at NBA Summer League last week said they would not encourage their clients to sign two-way contracts this coming summer. Their pleas, in some cases, will fall on deaf ears, while other agents don’t have the same negative feelings about it.

Still, even some team employees will admit that the contracts may not be as player-friendly as they seem.

“If I were an agent, I’d be trying to convince players not to sign those,” one Western Conference team executive told me.

Of course, that didn’t stop his team from already signing one player to such a deal.

Before we explain why, here’s how two-way contracts actually work

Here are the specific details for the new two-way contract:

  • They will act as a 16th and 17th roster spot for NBA teams beginning next season (2017-18).
  • The player can spend up to 45 days with the NBA team that signs him, although no time is guaranteed.
  • The rest of the player’s contract must be spent in the G-League, either for the team’s affiliate or another’s if the team he signs with doesn’t have a G-League affiliate yet. For the 2017-18 season, the G-League will represent 26 of the NBA’s 30 teams.
  • The player’s pay comes on a tiered salary system, which can last one or two seasons. While in the G-League, the player will make $75,000. It’s a significant increase from the current pay structure for G-Leaguers, who cannot make more than $26,000 with a one-way G-League deal.
  • When in the NBA, a player with a two-way contract will accrue a day of service and make money consistent with an NBA rookie minimum, which is about $816,000 next season. If a player spends 45 days in the NBA, he could make around $204,000.
  • In total, a two-way player who spends the maximum amount of time in the NBA would make $279,000.

That’s a lot more money than the G-League has ever presented its players.

But it’s not the perfect solution it may seem

For one, it’s still less than many players could make overseas.

But the other reason agents are wary of two-way contracts is that it restricts the player’s freedom of movement. Players who once could be called up by 30 different NBA teams now are linked exclusively with just one — and on a limited basis, at that.

Sure, there are technically 60 more players in the NBA. But it will only be at a specific team’s discretion, with no lateral movement until the contract is up. Before, the G-League’s most convincing selling point was how easily any player could be called up for a 10-day tryout. That goes away for players who sign two-way contracts.

“There’s good and there’s bad,” one agent who recently had a client sign a two-way contract told me. “On one hand, when teams are looking to make call-ups, you’re locked into the one team. But on the other, if the team really likes you, you have to do anything you can to get your foot in the door.”

2017 Las Vegas Summer League Los Angeles Lakers v Dallas Mavericks
Alex Caruso (right) signed a two-way contract with the Lakers.
Photo by Ethan Miller/Getty Images

It’s no surprise that the G-League loves the new structure

For those in the G-League, the two-way contract is an excellent new tool that should result in a talent influx, at least in some manner.

“It cements in place the opportunity to have guys in a development situation where they really are connected to the NBA organization and affiliate organization,” Kent Lacob, general manager of the Santa Cruz Warriors, told me. “It really provides more synergy and opportunity for guys to be integrated into both. I think that aids in the development of not just improving as a player, but specifically catered to the system, and the culture, and the team that they’re with.”

Likewise, Rio Grande Valley Vipers head coach Matt Brase told me he sees the two-way contract as an “awesome” new addition.

“The biggest thing is the league gets better,” Brase said. “I just think it’s good that we’re getting people toward the baseball minor league system where you’re bringing guys up the way you want to bring them up. I think that’s important, too, for players to have some stability. If you’re in a certain situation and learning that system, and you get a chance at the NBA level, you're comfortable.”

Brase brought up Gary Payton II, who played for the Vipers last year, as a player who could have been retained on a two-way deal had he signed with the Rockets organization this summer instead of the last one.

“We (would have been able) to keep him in the system,” Brase said. “Gary is a great system fit for us, the way he played.”

But Payton’s situation actually underscores some agents’ fears

Since Payton wasn’t protected by the Rockets, he signed with the Milwaukee Bucks in early April. He played six games with them, making $35,166, plus playoff bonuses. He remains under contract with the Bucks, albeit with a non-guaranteed deal.

However, if Payton can make the team next season, he’s in line to receive more than $1.3 million. (His contract will fully guarantee on Jan. 10, and Milwaukee has an open roster spot as of July 18.) Without his late-season addition to Milwaukee, the team may not have brought him back this year or handed him the starting point guard keys in Summer League.

That addition was only possible because Payton had autonomy to sign with any team rather than being tied into the Rockets.

“If your goal is to play in the G-League and you want to have the freedom of movement, then yeah, maybe it does make sense to have freedom of movement in signing instead,” Lacob said.

One agent suggested to me that the top G-League players — those who make the G-League All-Star team and those who have been considered “call-up candidates” on a year-round basis — won’t sign two-way deals. Among the two-way deals signed or reported so far, that seems accurate. Only one player listed on the G-League’s “Top-25 Prospect Watch” from last season has signed a two-way deal (Josh Magette at No. 19).

Still, the two-way contract might deflate the call-up market anyway, since fewer desirable players are even available for 10-day contracts and short-term, instantaneous acquisitions.

“With less call-ups, we’ll see,” Brase said. “That might be lower.”

For some prospects, a two-way deal will make sense. Players looking for more money but who can’t go overseas have a more lucrative G-League option. Prospects who believe an organizational investment in them as players is more beneficial to their development than floating around unattached will likely love the new structure.

The two-way contract is an attempt to keep the G-League moving toward a true minor league system, which is important to the NBA, and deservedly so.

But the new system isn’t a universally beneficial one, even if it improves the G-League in certain places.

“I wouldn’t say to any guy as a rule of thumb, it’s better to be a two-way player,” Lacob said. “I’d say, it probably depends on your specific situation.”