The basic structure of an amateur player draft in major sports is designed to "level the playing field" by giving preference to teams in reverse order of their finish in the standings. Major league baseball has implemented a free agent compensation system that disrupts the natural reverse order, and it's impact does nothing to create competitive balance in the game.
The reasoning for awarding compensation to teams who lose top players to free agency is that clubs who can not afford to keep players that they have developed will receive an extra draft pick when they lose those players to other teams. Major league baseball's compensation system doesn't quite work like that. This system gives extra draft picks to the haves, while penalizing clubs who try to compete with them.
More than half of the first 42 selections in the 2015 amateur player draft are either awarded to or forfeited by teams due to free agent signings or competitive balance rules, rather than being based on where teams finished in the previous season's standings. Of the first 36 selections, 15 picks will be made by the ten teams who made the playoffs in 2014.
Five teams lost their first round selections in the 2015 draft for signing free agent players who had declined qualifying offers from their former clubs. Those five are:
Seattle Mariners, (for signing Nelson Cruz)
New York Mets, (for signing Michael Cuddyer)
Toronto Blue Jays, (for signing Russell Martin)
San Diego Padres (for signing James Shields)
Washington Nationals (for signing Max Scherzer)
Ten clubs will receive a supplemental, "compensation pick" at the end of the first round, because they made a qualifying offer to a free agent player who signed with another team. Those ten clubs are:
Colorado Rockies (for losing Michael Cuddyer)
Atlanta Braves (for losing Ervin Santana)
Toronto Blue Jays (for losing Melky Cabrera)
New York Yankees (for losing David Robertson)
San Francisco Giants (for losing Pablo Sandoval)
Pittsburgh Pirates (for losing Russell Martin)
Kansas City Royals (for losing James Shields)
Detroit Tigers (for losing Max Scherzer)
Los Angeles Dodgers (for losing Hanley Ramirez)
Baltimore Orioles (for losing Nelson Cruz)
What's wrong with this picture? Four of the five teams losing their first round picks are teams that have not been in the post season for at least the past eight years. Six of the ten teams receiving compensation picks made the playoffs in 2014, and all but one has made the playoffs recently. The compensatory draft picks are awarded to teams who least need help.
The current collective bargaining agreement (CBA) scrapped most of the compensation picks that were given to, or taken from teams due to free agent player signings. Now, only a handful of elite players each season are subject to compensation. Their current clubs must make a qualifying offer, which was just over $14 million this past year, to receive compensation. Just ten players in 2015 and nine in 2014 received qualifying offers and signed with other clubs . No players accepted qualifying offers, opting instead to become free agents and search for a multi year contract.
Compensation picks are scheduled after the regular first round in what would be late first round or early second round selections. There are then six selections given as "competitive balance picks" given to clubs who are either in the smallest markets or have the least revenue. Another six competitive balance selections are made after the second round. These selections may help competitive balance, but they don't offset the imbalance created by free agent compensation.
The first ten selections in the first round are protected, and can not be lost as a penalty for signing a free agent player. The Boston Red Sox will lose their second and third round picks for signing Pablo Sandoval and Hanley Ramirez. Boston’s first round selection, No. 7 overall, is protected. The Chicago White Sox and the Minnesota Twins will also forfeit their second picks. There is something wrong with a system that protects the Boston Red Sox and Chicago White Sox, while penalizing the San Diego Padres and Kansas City Royals for signing free agent players.
The Detroit Tigers have paid as high of a price as any team for signing free agents in recent years. The club had no first round selections in 2010, 2011, or 2012 because they signed Martinez, Jose Valverde and Prince Fielder as free agents. As a result, the organization is struggling to come up with talent to fill the needs of the major league team without resorting to trading what talent they have left in the minor leagues, or signing more free agent players each season.
In 2015, the Tigers will have the 22nd pick in the first round, plus a compensation pick at number 34 overall, because they lost Max Scherzer to free agency. The team would have had another compensation selection had they lost Victor Martinez.
Smaller market teams usually trade players before they reach free agency, rather than losing them with only a draft pick as compensation. The current system helps only the teams who a) keep their players for a full six years, often because they are already competitive, and b) can afford to make a qualifying offer.
Aside from giving compensation picks after the first round to clubs who don't retain their own free agent players, penalizing teams for signing free agent players is intended only to serve as a deterrent to signing some of the best players. The current free agent compensation system distorts the balancing impact of the draft, penalizing the best free agent players and teams who would sign them.
It seems that the players' association would want to eliminate at least the penalty for teams who sign free agent players, but few players are impacted by the penalty, so the issue may not be near the top of their agenda at the bargaining table.
First round draft order
1. Arizona Diamondbacks
2. Houston Astros (for not signing 2014 pick Brady Aiken)
3. Colorado Rockies
4. Texas Rangers
5. Houston Astros
6. Minnesota Twins
7. Boston Red Sox
8. Chicago White Sox
9. Chicago Cubs
10. Philadelphia Phillies
11. Cincinnati Reds
12. Miami Marlins
13. Tampa Bay Rays
14. Atlanta Braves
15. Milwaukee Brewers
16. New York Yankees
17. Cleveland Indians
18. San Francisco Giants
19. Pittsburgh Pirates
20. Oakland Athletics
21. Kansas City Royals
22. Detroit Tigers
23. St. Louis Cardinals
24. Los Angeles Dodgers
25. Baltimore Orioles
26. Los Angeles Angels
27. Colorado Rockies (for losing Michael Cuddyer)
28. Atlanta Braves (for losing Ervin Santana)
29. Toronto Blue Jays (for losing Melky Cabrera)
30. New York Yankees (for losing David Robertson)
31. San Francisco Giants (for losing Pablo Sandoval)
32. Pittsburgh Pirates (for losing Russell Martin)
33. Kansas City Royals (for losing James Shields)
34. Detroit Tigers (for losing Max Scherzer)
35. Los Angeles Dodgers (for losing Hanley Ramirez)
36. Baltimore Orioles (for losing Nelson Cruz)