The value of compensatory picks

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An annual highlight of the NFL Owner’s Meeting is the awarding of compensatory draft selections. The number and location of the selections is determined through a heavily guarded secret formula that is based on the net loss of unrestricted free agents in the previous offseason. A fellow by the name of Craig Turner has done extensive work on predicting compensatory picks, which in turn leads a reader to a greater understanding of the process. I suggest you google Craig if you are interested in learning more.

On Monday, 32 compensatory selections were granted for the upcoming draft, four coming at the end of the third round; eight at the end of the fourth round; four at the end of the fifth round; seven at the end of the sixth round and nine at the end of the seventh round. The Ravens and Jets have the most compensatory selections, with four each.

But how important is the exercise in acquiring talent in the draft? This article looks at the value associated with the compensatory selections from three perspectives:

• The total value added to the draft by the 32 extra selections
• The value redistributed to the team’s receiving compensatory selections
• The relative value of the compensatory choices compared to the players lost

Data from the previously published article entitled “Draft Probabilities” was used as the basis for the value discussion. That article presents probabilities of success for 10 different metrics based on where the draft choice was located. For purposes of this article the probabilities are converted to the expected number of players. For example, the 97th draft position selection (the first 2014 compensatory choice awarded) has an 18.0% chance of becoming a five-year starter. This translates into that choice producing 0.18 five-year starters. These are referred to as player equivalents (or “PE”) in the remainder of this article.

The compensatory selection process adds 32 additional draft slots to the draft. The following table compares the value of adding 32 picks at the end of the draft to the value received by the teams receiving compensatory selections. The value is expressed as the number of PE for six different metrics and represents the sum of the 32 extra draft choices in each instance.

Not surprisingly, this shows that the 2014 compensatory picks awarded do provide more value to a team than just getting selections at the end of the draft, but the margin is not that great. Unfortunately for the teams who did not get compensatory draft choices this excess value comes from their pockets as the compensatory picks (with the exception of those at the end of the seventh round) result from the compensated teams “cutting in line”.

Focusing on five-year starters, history tells us that the compensatory picks will yield almost three (2.78 to be exact) five-year starters. This is about one more five-year starter than if the picks were just awarded at the end of the draft.

The next table shows the distribution of the five-year starters, and each of the other metrics, by NFL team. Teams are sorted by number of five-year starter PE.

This table reinforces the fact that the driver of value is not the sheer number of choices awarded but is more dependent on the location of the choices granted. The 49ers, for example, were given only one selection but has a greater probability of landing a five-year starter than the Cowboys and the Rams, each of whom have three compensatory picks.

The most relevant point, though, is that no team can expect a high return from the choices they received. The team that stands to gain the most in 2014 from the compensatory picks is the Ravens and they have only a 50-50 chance of gaining a single five-year starter.

Are NFL teams “made whole” for their free agency losses through compensatory draft choices? I looked at three situations that were pretty clear-cut before considering the question:

• Ravens lose Dannell Ellerbe, Paul Kruger, Ed Reed and Cary Williams
   -History says they will gain two players who last five seasons, one player who starts for two seasons and have a 50-50 chance of adding one five-year starter
• Steelers lose Keenan Lewis, Rashard Mendenhall, Ryan Mundy and Mike Wallace
   -History says the compensatory picks will yield one player who lasts five seasons, have a 75% chance of adding a two-year starter and one chance in three of adding a five-year starter
• Packers lose Greg Jennings and Erik Walden
   -History says the compensatory picks will yield one player who lasts five seasons, they have a 60% chance of adding a two-year starter and a 28% chance of adding a five-year starter

It seems clear (though clearer in some cases than others) that teams are not made whole but are given some semblance of compensation.

Finally, the NFL press release on this subject included historical information on the number of compensatory selections awarded since the practice began in 1994. This summary is presented below. Keep in mind that not all teams (e.g., Browns and Texans) were active during the entire period. The selections awarded the Houston Oilers were combined with those granted the Tennessee Titans for purposes of the summary.

Follow Tony on Twitter @draftmetrics

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