First Round Compensation (Part Three)

In part two we looked at the data and found that the system fails miserably if the goal is to compensate for homegrown players. In this part, let’s talk about what could be done.

At this point, there are three options:
1) Leave it as is.
2) Get rid of compensation completely.
3) Tweak the system.

The first two seem completely unrealistic, which means tweaking the system is the only plausible solution. One of the better ideas I’ve heard about this came from our own Joe Pawlikowski. Joe’s idea was simply to downgrade the compensation for those players who spend little time with their new team. Bring back the Type-C classification if you need a new name.

Instead of first round compensation, give these teams a pick after the second or third rounds, which does not completely punish teams for employing journeymen or rental players, but it places a tier or two in between those who are losing homegrown talent and those who are losing a player who barely played with them. Billy Wagner with the Red Sox comes to mind.

I’m not sure if there’s a silver bullet answer that magically cures the ailments, but the system appears broken enough that just about any kind of reform should represent an upgrade. The draft compensation system is no longer a market inefficiency used by insightful teams. Over the timeline each team but the Pirates raked in at least one first round compensation pick, and the teams that netted the most were the Braves, Red Sox, Angels, Athletics, Diamondbacks, and Rangers. The bottom five saw a jam of teams with three picks, leaving the Rays as the only team with fewer than two. The Royals, Rockies, Phillies, Orioles, Nationals, Marlins, and Astros held three apiece.

With the exception of the Phillies and Rockies, those lower teams usually do not field contenders. The upper teams do. Is the purpose of the draft not to help raise the lower team’s talent levels? And yet, baseball’s compensation rules are directly contradicting the entire purpose of the draft by supplying the better teams with more high-end picks than the teams that need them. Given the inherent variability of draft picks working out, sometimes all it takes is more ammo to hit the lottery.

We’ll examine the top pick fetchers and who gamed the system best later on, but for now let’s leave it on this note: the Yankees held as many first round compensatory picks as the sum of Rays, Orioles, Royals, and Pirates picks.