Printer-friendly

November 30, 2005

The BP Guide To Transaction Rules

Free Agent Compensation Draft Picks

by Thomas Gorman

Our second entry in the continuing Transactions Series explains how draft picks awarded to teams who lose their free agents every off-season, as delineated in Article XX(B)(4) of the Collective Bargaining Agreement.

Compensatory Draft Picks

Most serious fans of baseball are familiar with the compensatory draft pick rule of the CBA, even if they don't understand all of its details. Oakland Athletics General Manager Billy Beane is famous for snatching up free agents in the last year of their contracts so that he can hoard these picks. San Francisco Giants GM Brian Sabean is famous for signing free agents so that he can get rid of his draft picks. What are the details of this important CBA provision?

The first thing to learn is that the Elias Sports Bureau does a statistical ranking of all the players in baseball after every season. Every player is compared to every other player in his league in his positional group (DHs are in a group with first basemen and outfielders, second basemen with shortstops and third basemen; catchers, starters and relievers are each in their own groupings). Different positional groups are measured with different statistics, and the exact methodology is private. The CBA refers to a document, "A Statistical System for the Ranking of Players," which contains the details of the program, but that document is not attached to the CBA and attempts to obtain it from MLB and the Players Association have been fruitless.

A simple regression study of player rankings shows that the "Statistical System" is simple and relatively conventional. A handful of straightforward statistical categories are picked for each positional group (different groups will use slightly different categories) and players are ranked against each other using two-year averages. The NL catcher with the highest two-year batting average gets ranked first in that category. The AL reliever with the fifth-lowest ERA in the last two years gets a fifth-place ranking in that category. The rankings across the categories for each player are averaged (a five, a 10, and a one average out to a 5.33 rank) and are then converted into a 100-point scale. That's the Elias Player ranking.

Players who rank in the upper 30% of their position group in this ranking are tagged as Type A players. Players in the upper 50% who are not Type As (the next 20%) are tagged as Type B players. Players in the top 60% who are not A's or B's (the next 10%) are Type Cs.