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The More Important Topic That Coonelly Discussed

A week ago we posted our interview with Frank Coonelly, discussing a wide variety of topics relating to the Pittsburgh Pirates.  However, it seems that only one topic received attention, and it wasn’t even one of the interesting topics.

The discussion about payroll and attendance has been repeated many times.  The comments made by Coonelly weren’t new.  They’re also not anything shocking.  As I pointed out last week, what Coonelly was suggesting is the same thing teams like the Milwaukee Brewers and Tampa Bay Rays have done.  It’s an approach where teams try to win with a young, inexpensive team, the winning leads to an increase in attendance, and the increase in attendance allows the team to spend more to keep the club together and add more pieces to the mix.  The only alternative is to spend first and try to win with a more expensive team, which is far from a guarantee, and that’s probably why it’s not done by small market teams.

The whole discussion is irrelevant at this point, as the 2011 payroll is pretty much set, and the Pirates will need to win before we can set those events in motion and see how they play out.  There was another topic Coonelly discussed which is far more relevant to the team in the short term, and which doesn’t get discussed nearly as often as the payroll debates.  That was the following question on the compensation system in the MLB draft:

Kevin: Is the compensation system broken when a team like the Tampa Bay Rays gets 11 picks in the first 75 selections of the 2011 draft, while the Pirates get 1?

Frank: Yes.  We need to reduce the compensatory selections so that the second selection of the Club drafting first in the country is not 58 or 60 instead of 31.  Now, Tampa received those selections because it lost good players in free agency but it is difficult for the draft to serve its purpose when there are so many compensatory selections before the second round.

A discussion was brought up on this subject over at OBN this weekend, where I shared some thoughts on how the system was broken.  Charlie at Bucs Dugout shared his thoughts on the subject yesterday.  Ultimately, a system to compensate teams for losing free agents is good in theory, but the current system MLB employs is extremely flawed.

The Rays have ten picks in the 2011 draft before the Pirates pick for the second time.

The Tampa Bay Rays have ten picks before the Pirates pick for the second time.  One of those picks is the normal first round pick for the Rays, with the other nine serving as compensation selections due to the loss of Carl Crawford, Rafael Soriano, Grant Balfour, Joaquin Benoit, Randy Choate, Brad Hawpe, and Chad Qualls.  This doesn’t count the extra second round pick they get for Balfour (h/t to River Ave Blues for the draft order).

The compensation system is meant to give the Rays some sort of consolation for losing a guy like Carl Crawford.  Crawford was drafted by the Rays in the second round of the 1999 draft.  He made his debut in the majors in 2002, and has been a key player for the Rays from 2004-2010.  However, Crawford was signed to a seven year, $142 M deal by the Boston Red Sox, which is a total that the Rays can’t compete with.  Therefore, the Rays get two compensation picks for losing one of their best players.

One big problem lies with guys like Brad Hawpe or Chad Qualls.  The Rays traded for Qualls at the trade deadline, sending a player to be named later to Arizona (Matt Gorgen, who didn’t even rate in Arizona’s top 30 prospects this year).  They signed Hawpe as a minor league free agent in late August, and called him up on September 1st.  Yet they get two first round compensation picks for having Hawpe for a month, and Qualls for two months.

Another issue is that relievers get too much value in this system.  Scott Downs is a 1.0-1.4 WAR reliever, and is a Type A free agent.  Furthermore, he is rated as the second best free agent on the market, behind only Adam Dunn.  That awards Toronto a first round pick, as well as the number 35 overall pick in the draft, during the compensation round.  By comparison, Cliff Lee was a 7.1 WAR player in 2010, and one of the best pitchers in baseball.  Carl Crawford has been a 6.9 WAR player in 2010.  Jayson Werth was a 5.0 WAR player in 2010.  All three players rated lower than Downs, which means two things.  First, it means the teams that lost those players get lower compensation picks than Toronto does for Downs.  Second, it means that if any team signs Downs and one of those players, the compensation for Lee/Crawford/Werth would be a second round pick.

As it turns out, the Angels signed Downs, and since their first round pick was protected, that means Toronto received Los Angeles’ second round pick, the 74th selection in the draft.  Had the Angels also signed Adrian Beltre, who they were targeting this off-season, the Boston Red Sox would have received the 104th selection in the draft as compensation, rather than the number 26 overall pick which they got from the Texas Rangers.  That’s a difference of 78 picks, all based on who signs Beltre, and who else that team signs.  There’s no way that Downs should be rated higher than any rated position player, and the fact that he could cause a top position player’s compensation to drop so low demonstrates a big flaw in the current system.

One of the biggest issues contradicts the whole idea of the compensation system.  The system is designed for teams to receive compensation for a player they are losing.  The compensation, like the case with Crawford and the Rays, is supposed to make up for the fact that you’re losing a vital piece of your team.  But each year we hear stories about agreements between a team and a player to NOT accept arbitration.  Teams offer arbitration in most cases hoping that the player doesn’t accept.  If a team basically says that they don’t need the player, then no compensation should be awarded for the player.

In fact, the whole offer process is ridiculous.  One year of arbitration is meaningless in most cases.  Take the Rays and Joaquin Benoit.  No one could see him getting the three year deal he received, but it was pretty much a guarantee that he’d receive more money on the open market than he would going to arbitration for a raise over his $750,000 salary in 2010.

There’s also the problem of moves not balancing out.  The Boston Red Sox signed Carl Crawford from the Rays, which meant they had to give up the 24th overall selection, since Crawford was a Type A free agent.  However, they lost Victor Martinez and Adrian Beltre, who were both Type A free agents, netting them the 19th, 26th, 36th, and 40th overall picks.  They gave up Martinez and Beltre, and the 24th overall pick, and in exchange got Crawford, and four of the top 40 picks.  A team that signs a Type A free agent shouldn’t get compensation for losing a Type A free agent.  Otherwise you could lose a player, sign an equal player, and end up ahead.

That’s what the Nationals did.  They received the 23rd and 34th overall picks for losing Adam Dunn to the White Sox.  They lost the 66th overall pick for signing Jayson Werth.  So the Nationals replaced Dunn with a player of similar value, and in the process turned their 66th overall pick in to the 23rd and 34th overall picks.  Washington ultimately wasn’t hurt on the field by losing Dunn, but received two top 40 picks for losing him, and only had to give up the 66th overall pick to replace him.  That’s a major inefficiency.

The draft compensation system is definitely broken, but it’s not something that should be scrapped.  It needs an overhaul, to correct some of the major inefficiencies, and to make it fair for all teams.  Tomorrow I will give my suggestions for how to fix the compensation system, specifically addressing some of the issues above.  Feel free to mention any of your suggestions in the comments below.

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Tim Williams

Tim is the owner and editor in chief of Pirates Prospects. He started the site in January 2009, and turned it into his full time job during the 2011 season. Prior to starting Pirates Prospects, Tim worked with AccuScore.com, providing MLB, NHL, and NFL coverage to various national media outlets, including ESPN Insider, USA Today, Yahoo Sports, and the Wall Street Journal. He also writes the annual Prospect Guide, which is sold through the site. Tim lives in Bradenton, where he provides live coverage all year of Spring Training, mini camp, instructs, the Bradenton Marauders, and the GCL Pirates.

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  • http://twitter.com/JamesSantelli James Santelli

    Great post, Tim. It’s obvious that this compensation is flawed from the get-go, but it certainly says something that the Rays probably recognized these flaws and have worked to benefit from them. The Rays rely just as much as the Pirates on the draft, and Tampa Bay is using the system to their advantage. Good for them for recognizing it, but it needs to change.

  • Anonymous

    The other flaw is trading for a player like Miguel Olivo like the Blue Jays did and getting a compensatory pick for him when he signs elsewhere.

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