The New CBA: Compensation Picks

In the first part of a two part feature, Jason Avery dives deep into the new Collective Bargaining Agreement, agreed upon just over a month ago. Up first, the new way compensation picks are handed out, and why the new system has some inherent flaws.

During the World Series, the owners and players agreed to a new labor contract nearly two months before the current was set to expire. Some of the biggest changes came with regards to the draft and the handling of 40-man rosters when players need to be added to keep them from being eligible from the Rule 5 Draft. After looking at some of the changes, I've been left scratching my head as to why management implemented some of the new changes they did.

In the past, teams that drafted players in the first round and subsequently lost them to college received a compensatory pick at the end of the supplemental first round. Now that team will get the pick right after that slot. For example, if the Tigers fail to sign the 27th pick in next June's draft (if they don't lose the pick in free agency), they will receive the 28th selection.

What this will do is give teams a safety net should negotiations go badly with whom they select. Teams will get similar compensation for second rounders, and unsigned third rounders will net a sandwich pick between rounds three and four. The compensated picks do not get an extra pick if they go unsigned, so this prevents teams from simply stockpiling picks.

Free agent compensation was tweaked, with Type C free agents being eliminated, while Type B free agents will receive a sandwich pick between rounds one and two, instead of taking a signing team's pick.

Type A compensation stays the same, although that category will be limited to the top 20 percent of players, instead of 30 percent. Type B is reduced from 31-50 percent to 21-40.

I want to be abundantly clear on this topic. I don't mind the extra picks for those teams that fail to sign players, because it gives them some extra leverage in negotiations, and we're only talking about potentially a handful of picks being awarded.

However, by keeping the free agent compensation picks, and by not changing the rules on how they are doled out, MLB has let down those teams who will be picking at the top of the draft. The changes have already reestablished the market for the second tier of free agents, and with teams no longer fearful of losing one of their own picks for a Type B free agent, they have heavily pursued these players in the first few weeks of free agency. After having only 22 compensation picks combined in 2003 and 2004, there were the same number of picks in 2005, and 19 more this year.

With teams having plenty of money to throw around, the number of compensation picks has already increased for 2007, and by lumping all of the compensation picks together, the supplemental picks will amount to another full round, which limits the talent pool for those teams picking at the top of the draft.

As of today, 22 compensation picks have been awarded (Washington received a pick for losing Jose Guillen on Monday), with 19 players available that would net extra picks (6 Type A, 13 Type B). Obviously, not all of these players are going to switch teams, but if even nine of them change teams (a definite possibility), the Devil Rays would have to wait 50 picks before making their second selection, while the Rangers will have made five selections. The Rangers would've added a sixth pick, but it appears they have locked up Vicente Padilla. The Rangers will make five selections despite forfeiting their original first-rounder to the Blue Jays for signing former Tiger Frank Catalanotto to a three-year deal in November.

A big part of the problem is how the compensation picks are awarded, and here is how Texas' picks break down. By signing Catalanotto, the Rangers surrendered the 16th pick (had Cincinnati not picked higher in 2005, Texas would've picked 15th, and not lost that selection) to Toronto, but netted the 17th pick after Houston signed Carlos Lee. The Rangers also received the 24th pick after Gary Matthews, Jr. inked a deal with the Angels.

Because Lee and Matthews were Type A free agents, Texas also received selections in the supplemental first round, and got an extra supplemental pick when Mark DeRosa bolted for the Cubs, so that's how Texas received their selections.

The Rangers have had some discussions with Barry Zito, but even if the Rangers sign him, it would only cost them their second rounder, so for potentially signing two Type A and losing two Type A and one Type B free agents, the Rangers get five first-round picks, and only lose two of their own picks, which is ridiculous. The Tigers could've actually moved up in the draft had they offered arbitration to Sean Casey, and he signed with the Cardinals for example.

I don't have a problem with Texas being rewarded with some compensation, because they'll likely lose more players than they'll sign, but all of these extra picks show just how flawed the system is.

If baseball wanted to keep the compensation picks, why not do something meaningful and have a system similar to what the NFL does, where picks are awarded on net gains and losses?

One other thing baseball did was to base the supplemental round on the reverse order of standings, which is what the original draft order is based on. This will help a little bit, but how many free agents have the likes of Kansas City, Tampa Bay and Pittsburgh had that other teams have coveted enough to warrant offering arbitration to get compensation?

In part two, the draft will be examined further, including new signing dates, which players are eligible, and how it could affect drafting tendencies.

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