Time to Get Rid of NFL Compensatory Selections

Accompanied by the customary media hype, the NFL recently announced the awarding of 32 compensatory draft selections. The determination of the selections to be awarded has evolved into a science. A handful of website and bloggers have “cracked the code” and do an excellent good job of projecting the compensatory selections. I am not a fan of the current compensatory selection process. It is my view the selections provide minimal recompense for the losses a team suffers during free agency. Either there should be no compensation at all or the compensation should be fair. Instead, the NFL has taken a "something is better than nothing" approach. Supporters of the current system can cite a list of compensatory selections that have gone on to be successful. In my opinion, this is strictly anecdotal information and there is no reason a compensatory pick should be more or less successful than the rest of the selections that surround them. As will be supported later in article by hard data there is no reason to expect that the compensatory selections will yield more than two or three starters each year. Is there a better way to do it? I think that maybe there is. This article is intended to encourage discussion of the process without regard to the feasibility of actually pushing through a change. I acknowledge that the NFL and NFLPA have negotiated the matter of compensatory selections so it would not be easy to change. Feasibility will be discussed in the course of the article. Before getting into that, let us review the process in more detail so that the proposed change is considered in the appropriate context. Compliments of the NFL, here are the players lost and signed by the 14 NFL teams that have been awarded compensatory picks. The rules governing compensatory picks are impossible to find in writing but the aforementioned cap “scientists” have discerned the most important elements based on historical NFL awards. We do know that the number of picks is limited to 32, with no more than four awarded to any single team. What are the 32 compensatory selections likely to yield? Based on 20 years of history and considering their location in the draft, this year’s compensatory selections can be expected to yield the following:
  • 26 players who will play in the NFL for at least one season
  • 11 players who will last at least five seasons in the NFL
  • Six players who will start for at least two NFL seasons
  • Between two and three players who will start for at least five NFL seasons
  • One player who will be selected to at least one Pro Bowl
The value of these selections is further diminished by the fact that the compensatory selections cannot be traded. This means they cannot be used as a throw-in that might facilitate a trade. I am not sure what the trade prohibition is intended to accomplish. The Chiefs, with four selections between rounds three and six, received the most value in 2015 of any of the NFL teams. History tells us there is less than a 50% chance that the Chiefs’ compensatory picks will yield even one five-year starter. So there should be no illusions that the teams are receiving even moderate value in exchange for their free agent losses. I would argue that a superior option, and one that does a better job of contributing to league parity, is to adjust a team’s cap through a “luxury tax” based on free agent signings. Let us look at the Chiefs to see how it would work. Here is a summary of free agents lost and signed by the Chiefs, with dollar values representing the 2014 cap for each player as published by overthecap.com. For each player signed or lost, the contract amount would be multiplied by a percentage (say 17.5%, which is the Major League Baseball luxury tax rate) and the resulting product would be transferred from one team’s next annual cap number to another team. The Chiefs would receive a annual net cap increase of almost $2.4 million. The tax rate could be higher or lower depending on how much parity the league wants to encourage and based on negotiations. I think there are several reasons why my proposal is better than the current system:
  • Perhaps most importantly, the proposed process provides greater flexibility in that the additional cap space could be used to either sign one or more free agents that could provide immediate help or allow a team to retain a free agent it may otherwise lose
  • The proposed process established a direct relationship between the value of a lost player and the compensation received
  • All teams affected by free agent gains or losses would be included
    • This is not true of the current system where the 32-choice limit leaves some teams with a net loss of free agents and no compensation
How would the owners, the union (“NFLPA”) and Roger Goodell react to such a proposed change? It is only fair to speculate that, unless it is a sold as “its good for the game” by Czar Roger, both the owners and the NFLPA are likely to be resistant to making a change. I have heard no displeasure voiced against the present system and without a “champion” any change is unlikely. While there should be no change in overall spending (it is just a matter of the cap dollars changing pockets), the NFLPA may see it as having the potential to restrict player movement due to the luxury tax component. Just by the nature of the bargaining process, the NFLPA would want something in return for making even a neutral change. It takes the vote of 24 owners to change an NFL rule. Whether that level of commitment is obtainable depends on the balance between teams that are buyers or sellers of free agents. The sellers would not like this change. The current system allows them to pursue free agents without having to surrender anything other than the compensation paid to the player they signed. The proposed process introduces an additional cost of signing free agents. For a team that essentially sits out free agency, I would think they would support this change as it provides value that could be greater and maybe more fair than the current system when free agents are lost. It is hard for me to imagine that 24 positive votes could be garnered. The bottom line is that, my protestations to the contrary, we are stuck with the present system. There is certainly no discussion I have seen that indicates otherwise. Follow Tony of Twitter @draftmetrics

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