In order to help level the playing field between small and large market teams, MLB has a system in place that awards draft picks as compensation for departing free agents. Under the new CBA, in order for a team to receive a compensation draft picks for a player, they must meet the following criteria:
● The free agent must have been with their club for the entire season.
● The team must offer the departing free agent a guaranteed, one-year contract “…with a salary equal to the average salary of the 125-highest paid Players from the prior season” (MLB). If the player rejects the contract, then the team will receive compensation draft picks.
If a team has their one-year offer rejected, then they will receive two compensation draft picks in the upcoming year’s draft — the first-round draft pick from the team that signs that player, and one supplemental first-round pick. If the signing team has one of the top 10 picks in the draft, though, their pick is protected and they will instead forfeit their second-highest draft pick.
It used to be that draft pick compensation was influenced by a player’s status as either a Type A or Type B free agent, but that has been supplanted and is no longer in use.
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