Free Agent Compensation Likely Gone

It appears that teams losing free agents will no longer receive draft pick compensation for their loss. That change being negotiated for the new collective bargaining agreement could have a major impact.

One small piece of consolation for teams unable to re-sign their own free agents was that they would at least receive compensation for them in the way of draft picks when they signed elsewhere. Now, teams have been notified that Major League Baseball is willing to negotiate that away for the next collective bargaining agreement.

The players' union wants the change figuring that it would open up bidding for players if teams didn't have to give up a draft pick to sign one of the game's top players as a free agent. Several teams have backed away from signing free agents, knowing that they would have to sacrifice draft picks to do so.

The change would likely have at least three major effects on the game.

First, teams like the Oakland A's, who haven't been major players in free agency, could now start to enter the market since they won't sacrifice draft picks to do so. Teams that are intent on building their clubs through the draft can now also pursue free agents, potentially speeding up their rebuilding plans.

Second, major market teams like the New York Yankees, who are always players in the free agent market can retain their draft picks and presumably also build stronger minor league systems. That would give them players for down the road or the ability to have better young players to use as trade bait to obtain established major league talent.

The last, and potentially most significant change, would see teams more likely to trade players rather than risk trying to re-sign them with draft pick compensation as Plan B. A team like the Washington Nationals may be more likely to unload Alfonso Soriano, rather than bank on being able to re-sign him either before he hits free agency or as a free agent.

Phillies' GM Pat Gillick stayed away from signing big-name free agents this past winter, partly because he didn't want to sacrifice draft picks to do so. Instead, Gillick turned to lesser free agent signings and trades to reshape the club. As things stand now, the major impact on the Phillies this off-season would be positive. They have money to spend thanks to dumping salary when they sent Bobby Abreu and other players out of town in trades and they don't have many high-profile players who will be on the free agency market. The Phillie most likely to hit the open market is David Dellucci and while the Phillies wouldn't get compensation for losing him, they also wouldn't lose draft picks if they were to sign other teams free agents.

It's unclear what, if any, impact the new compensation rule would have on arbitration. Currently, teams must offer players arbitration to collect on the compensation and many players are often offered arbitration only because the teams know they will sign a long-term deal elsewhere rather than accept a one-year arbitration settlement. Without pending compensation, it's likely that those offers will now simply go without being made. That would have avoided situations like what happened between the Phillies and Kevin Millwood, who didn't like the offers he was getting elsewhere and decided to return to the Phillies for another season, looking to up his value on the free agent market the following year. The result for a surprised Phillies' organization was having to make other cost-cutting moves to fit Millwood into their salary structure.

It will be interesting to see if baseball will now try to use the dropping of free agency compensation as a bargaining chip to perhaps change arbitration rules, which many owners would like to have changed.

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