The difference between a one-way contract and a two-way deal may seem inconsequential to fans following their favorite teams and their offseason moves. After all, what does it matter? Who was signed? How long is the contract and what is the cap hit? If it’s a big time signing (or a Calgary Flames signing), maybe ask if there’s a no-trade clause included on the contract. Aside from those narrowly focused talking points, everything else is just legal speak in a legal contract.
For young players, there’s another aspect to a contract that can make or break a deal: the two-way contract.
For Florida Panthers restricted free agent Shawn Matthias, the difference between a one-way contract offer and a two-way agreement makes all the difference in the world. George Richards of the Miami Herald talked to Panthers assistant GM Mike Santos about the Shawn Matthias hold-out and their plans for the 23-year-old forward.
“Panthers assistant general manager Mike Santos said Wednesday that the delay in signing center Shawn Matthias comes down to something simple: ‘He and his agent can’t wrap their heads around us not offering a one-way deal.’
Santos said that the restricted free agent is getting a two-way deal and that’s it. Matthias is competing with the likes of Ryan Carter, Tim Kennedy and Evgeny Dadonov for a spot. Therefore, ‘I can’t give him a one-way,’ Santos said. ‘I have to leave spots open for competition.’”
There are two main differences between one-way and two-way contracts to keep in mind.
Two different salaries
Financially speaking, the major difference between the two types of contract is that a two-way contract will have two different salaries for a player depending on the league they’re playing in. If a player is in the NHL, he’ll make a certain salary; but if he’s sent down to the AHL, then he’ll make a different (much lower) salary. In many cases, the AHL salary is only 10% of the NHL salary for the same player. In a perfect example, Matthias’ entry-level deal paid him $62,500 per season in the AHL, but an average of $770,000 per season in the NHL.
On the other hand, a one-way contract pays the player the same salary whether they are playing in the AHL or the NHL. When we hear about Wade Redden getting paid $6.5 million to play with the Connecticut Whale, it’s because he’s on a one-way deal. Obviously, it’s in the teams’ best interests to sign players to two-way deals; while it’s in the players’ best interest to negotiate one-way deals in case they are sent to the minors.
From the team’s perspective, just as important is that two-way players are usually waiver exempt. In laymen’s terms, that means they can send a player down to the AHL and recall them as many times as they want without having to worry about another team taking their player. If a player is on a one-way contract, they have to clear waivers every any time they are moved. The player has to clear waivers if they are moved to the AHL; they have to clear re-entry waivers if they are recalled to the NHL. Each time, the player is made available to all 29 other teams for the same contract. Obviously, teams want the flexibility to utilize their players as they see fit.
For a team like the Florida Panthers, it’s extremely important to sign the fringe NHL players to two-way contracts. With all of the competition in Florida after their summer shopping spree, it’s no surprise that the Panthers are insistent on a two-way deal for a player like Matthias. Since there’s no guarantee that Matthias will even make the team out of training camp, they want to protect their asset and don’t want to lose the young forward for nothing.
We’ll see how the negotiations play out between the Panthers and Matthias this offseason. From Santos’ comments, it sounds like a two-way contract is more important than any other terms in a potential contract.