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eMailbag: Free Agent Compensation

by Mike Nichols on October 30th, 2007 at 5:35 pm

A reader of MetsBlog recently sent in the following email…

“Hey, any chance you might have a post on how free agent compensation works.”

…free agent compensation is one of the most confusing parts of the off-season, but fortunately there are many resources out there that help explain it…

Last November, Keith Law, at his blog for ESPN.com, posted a terrific primer regarding free agent compensation and how it works under the new collective bargaining agreement.

Here is a quick rundown on free agent compensation using information collected from the above Law post, Major League Baseball’s 2007 – 2011 Collective Bargaining Agreement, MLB Trade Rumors and Cot’s Baseball Contracts:

  • Free agents are grouped into three types of players; Type A, Type B and Unclassified.
  • Type A players comprise of players in the top 20 percent of their positions. A team that signs a Type A player must give its top draft pick to the team that is losing the player. The team that lost the player also receives a supplemental pick between the first and second rounds. However, if the signing team has a draft pick in the first half of the first round (picks 1-15), their first round pick is protected and would then surrender their next highest draft pick.
  • Type B players comprise of players in the top 21-40 percent of their positions. Any team that loses a Type B players receives a supplemental pick, but the signing team does not lose any picks.
  • Any team who loses an unclassified player is not subject to any compensation.
  • The formula to determine player types, which is not widely known, is comprised of several factors, including statistical analysis of the players previous two seasons, and players are grouped into the following positional categories: 1B/DH/OF, 2B/SS/3B, C, SP, and RP.
  • In order for the former team of a free agent to receive compensation for losing a player to free agency, the player must sign with another team before December 2 or the team must have offered the player arbitration before December 1.
  • If a team signs multiple free agents from within the same category, the team loses picks in order of the highest-ranked players.
  • Teams are limited to the number of Type A and Type B free agents they can sign, which is determined by the number of free agents available. Example: If there are less than 14 Type A or B free agents, no one team can sign more than one Type A or B free agent. According to Law, last season there were approximately 93 Type A or B free agents, who filed for free agency, which left the per-team quota at eight.

…is the room spinning…

…as you can see a lot goes into free agent compensation…i would imagine this is one of the many determining factors that come in play for all mlb gms, including Omar Minaya…and in case you are wondering, if the Mets sign a type a free agent, they have the 22nd pick in the first round of next season’s first-year player draft…on the flip side if the buzz concerning Tom Glavine and the Braves comes to fruition, the Mets would receive the Braves first rounder, which is the 18th pick…

…seriously, is the room spinning yet…