07 January 2010

Amateur Talent Addendum: Free Agent Compensation Part I

After writing a piece on an international draft, I figure there were some aspects of it that need more exploration. This multipart series will reintroduce what Type A or B compensation means as well as how to implement compensation into this new draft system I propose. Part I will reacquaint you with what this compensation means.

As it stands now, the loss of a type A or B free agent results in compensation in the form of draft picks. For a type A free agent this means that the former team of the player receives a sandwich round pick between the first and second rounds according to the Elias rating (higher ranking free agents result in a higher draft pick during this round) as well as the new team's first unprotected draft pick. This translates to the second half of the first round (first half picks are protected) or the first half of the second round. Further complicating this approach is that if one team signs two type A free agents, the team who gave up the higher rate free agent would be the one who secures the higher pick. The second team then winds up with the next unprotected pick. An example would be last year when the Yankees signed CC Sabathia, AJ Burnett, and Mark Teixeira. The Yankees gave their 1st round selection to the Angels for Teixeira (98.889 rating), their 2nd round pick to the Brewers for Sabathia (98.110 rating), and their 3rd round pick to the Blue Jays for AJ Burnett (89.729 rating). It should be noted that although original round 1 to 3 picks are protected for one year, compensatory picks are not. If a team fails to sign a player with a compensatory pick, they do not receive a replacement in the following year's draft.

After the jump, we will more greatly characterize how Type A and B status is determined.

After the conclusion of each season, Elias Sports Bureau uses a somewhat secret formula to determine a rating of every player in baseball . . . not just the free agents. A type A player is considered to be a free agent who has performed in the top fifth of baseball over the past two years. A type B player is considered to be a free agent who has performed in the second fifth of baseball over the course of the previous two years. Former teams who lose players beneath the 60th percentile will not receive compensation.

So are there restrictions on compensation?
Yes, compensation is in effect until the first week in December when there is a deadline for the former team to offer arbitration. Compensatory terms remain in effect if the team offers arbitration and the player declines.

How are players rated?
First, players are divided by position. The groupings are as follows:
Group 1: 1B, OF, and DH
Group 2: 2B, 3B, and SS
Group 3: C
Group 4: SP
Group 5: RP

A weighted system that takes into consideration for lost time on the DL uses these statistics:
G2: PA, AVG, OBP, HR, RBI, total chances, Fielding %
G3: PA, AVG, OBP, HR, RBI, Fielding %, Assists
G4: Total games (relief appearances are discounted by half), IP, W, Win %, ERA, K
G4: Total games (relief appearances are discounted by half), IP, wins and saves, H/IP, K/BB, ERA

As you can imagine, this system is needed in terms of granting compensation for lost players for small market teams, but the manner in which they do this is rather poor. In the next part of this series, I will discuss a revamped approach that will fit into the proposed system of slotting I made earlier.

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