The Basics and Methodology on Projecting the Compensatory Draft Picks for 2015 (and beyond)

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One aspect of the NFL that I’ve always had a unique fascination with is its practice of awarding compensatory draft picks to teams that incur a net loss of free agents from the previous offseason. Perhaps it’s fascinated me because its operating details are deliberately mysterious, and we are usually left with questions and answers to be dealt with in the process. Plus, it’s a nice gift when the team you root for gets more draft picks to improve itself than you expected.

Throughout the previous decade, the person who has brought the most public awareness to how the compensatory draft pick process works is someone known as AdamJT13. For every year then, he would write up a detailed projection of which picks he expected to be award to which teams. His contributions have been valuable to gain a better understanding. Unfortunately, when the previous CBA expired, Adam declined to give a projection for 2011, and understandably so given that we had no idea whether the new CBA would even include compensatory picks. He has not offered a detailed projection since 2010, and has not posted at his blog since June of 2012.

When I discovered OTC, I saw great potential for Jason’s outstanding work in collecting contract and salary cap information—in numerous avenues. One of those avenues lies in projecting compensatory picks. This is because one of the primary factors in determining their awarding, as well as some other factors that I will explain below, is based on data that Jason has available here at OTC.

Therefore, my goal for the 2015 offseason is to attempt to carry on the excellent work that AdamJT13 has done. I will be heavily citing his work to offer my own projection for 2015’s compensatory picks. However, that is only the beginning. Thanks to OTC I will also be able to program automatic projections for 2016 and beyond. When free agency for the 2015 league year begins March 10, I will be able to denote which free agent signings will qualify for the compensatory pick formula, and as free agency proceeds you will be able to get a broad idea on which teams could earn which compensatory picks for 2016. It will be broad because happenings during the 2015 season (mainly early cuts) could alter the picks further.

It is important to remember that these projections are ultimately estimates, and we will not know for sure what the picks will be until some time in March, when the league announces them. I anticipate that several of the projected picks will not be exactly correct, and even Adam himself could not project with full accuracy. But I do feel confident that this projection will give a general idea as to where teams stand in earning picks.

The Basics

As explained by AdamJT13 (bolded mine):

As the NFL explains, compensatory picks are awarded to teams that lose more or better compensatory free agents than they acquire. The number of picks a team can receive equals the net loss of compensatory free agents, up to a maximum of four. Compensatory free agents are determined by a secret formula based on salary, playing time and postseason honors. Not every free agent lost or signed is covered by the formula.

Although the formula has never been revealed, by studying the compensatory picks that have been awarded since they began in 1994, I’ve determined that the primary factor in the value of the picks awarded is the average annual value of the contract the player signed with his new team, with an adjustment for playing time and a smaller adjustment for postseason honors.

As regular visitors of OTC know, this primary figure is known as Average Per Year, or APY. Because this is a common figure used here, it is also quite useful for setting the primary factor in determining compensatory picks. Adam has also determined that playing time seems to be determined by offensive & defensive snaps played, while postseason honors are determined by Pro Bowl appearances.

Also take note that only certain players qualify for the formula. Adam explains this further:

In order to qualify for the comp equation, a player must have been a true Unrestricted Free Agent whose contract had expired or was voided after the previous season (i.e., he cannot have been released by his old team); he must sign during the UFA signing period (which ended July 27 last year); if he signs after June 1, he must have been tendered a June 1 qualifying offer by his old team; his compensatory value or contract value must be above a specific minimum amount; and he cannot have been permanently released by his new team before a certain point in the season (which seems to be after Week 10) or, possibly, before getting a certain amount of playing time, unless he was claimed off waivers by another team.

This is perhaps the provision that trips up most people who only have a basic understanding of the process. One example of a player that would not qualify is DeMarcus Ware. Although he signed a hefty contract with a $10 million APY in 2014, because his previous contract was terminated instead of expiring or voiding, in the formula he does not count against Denver nor in favor of Dallas.

Methodology

Adam describes the basic methodology here:

Each qualifying player has a value based on his contract, playing time and postseason honors, and that value corresponds to a round in the draft. In the compensatory equation, each qualifying player that a team signs cancels out a qualifying player that the team lost whose value is the highest in the same round. If there are no lost players remaining in that round, the signed player cancels out the lost player whose value is the next-highest. A signed player will cancel out a lost player whose value falls in a higher round only if there are no remaining lost players. After all of a team’s qualifying signed players have canceled out a lost player, the team can receive a comp pick for each qualifying player who remains. For example, consider a team that loses one qualifying player whose value falls in the third round and another qualifying player whose value falls in the sixth round but signs a qualifying player whose value falls in the third round. That team would receive a sixth-round comp pick because the signed player would cancel out the loss of the higher-valued player. If the signed player’s value were equal to a fourth-round pick or lower, however, the team would receive a third-round comp pick, because the signed player would cancel out the loss of the lower-valued player.

(There are two additional types of awards known as “net value compensatory picks” and “non-compensatory picks” that Adam also explains, but since I project that neither of these provisions will be invoked for 2015, I will leave these details aside for now.)

Adam also explains the most difficult part of the process: “determining all of the cutoff points – the minimum value needed to qualify and the value ranges for each round of the draft.” Observing that by year to year the cutoff points appeared to increase at the same rate as the salary cap, his solution to address this difficulty was to increase the cutoff points at the same rate. Since OTC is all about the salary cap, this is of course information that is quite handy here.

The awarding of the 2014 compensatory picks proved quite insightful for this goal in one aspect, while opening up new questions in another. For the former, the cutoff ranges in 2014 were some of the smallest overall that we’ve seen, all within 1% of each other. Although there was one pick that was strangely out of sync that will be explained in a moment, for this reason I have elected to keep it simple and use the average of the cutoff picks from 2014, and apply a 5% increase to them for 2015, representing an increase in the salary cap from $133 million in 2014 to OTC’s current $140 million projection for 2015. The following table explains this process:

CutoffPlayersEstimated 2014 cutoffEstimated 2015 cutoff
(projected 5% increase)
3rd/4thDashon Goldson (3rd): $8.25M APY
Gosder Cherilus (4th): $7M APY
$7,625,000 APY$8,006,250 APY
4th/5thBrent Grimes (4th): $5.5M APY
Keenan Lewis (5th): $5.1M APY
$5,305,000 APY$5,570,250 APY
5th/6thEd Reed* (5th): $5M APY
Dustin Keller (6th): $4.25M APY
$4,625,000 APY$4,856,250 APY
5th/6thErik Walden (5th): $4M APY (79.7% snaps)
James Casey (6th): $4M APY (13.9% snaps)
$4,000,000 APY$4,200,000 APY
6th/7thRashard Mendenhall (6th): $2.5M APY
John Phillips (7th): $1.7583M APY
$2,129,167 APY$2,235,625 APY

The asterisk by Ed Reed’s name is because the 5th rounder awarded to Baltimore for him was not the last one. It was instead awarded to Green Bay for what could only be Erik Walden. But Walden’s contract was only for a $4 million APY. Walden’s 2013 playing time was not unusual (79.7% of the snaps), nor did he make the Pro Bowl. He should have only earned Green Bay a 6th instead of a 5th. I can only chalk this up to an unknown anomaly that can’t be explained, and thus should be ignored for now.

UPDATE: After consulting with Jason I think we’ve figured out the Erik Walden mystery.  He reminded me that Dustin Keller spent all of 2013 on IR (and also that Mike DeVito did not play in many snaps).  I anticipated earlier that it lowered their values to the 6th round but then checked the next pick (James Casey, $4M, 13.9% of offensive snaps) and it also fit in line with Keller and DeVito’s devaluing.  For this reason, I am now estimating the 2015 5th/6th cutoff to be around $4.2M APY, a 5% increase of $4M.  This will change the 2015 projections a bit, as well as to add some extra scenarios–see the post on 2015 specifically for those updates.

Another important qualifier is that the OTC’s 2015 salary cap figure of $140 million is still an unofficial estimate. Within this model, a deviation in that number could affect the cutoff points. However, for 2015 I anticipate that a reasonable deviation from $140 million could affect only one player in TJ Ward, who could count against the Broncos as either a 4th or 5th rounder. I will explain that in more detail in the 2015 projection post.

The new development that has happened since AdamJT13 stopped projecting the picks is that the minimum value needed to qualify for the formula appears to have dropped considerably, resulting in more qualifying players. For example, in 2009 Adam observed the threshold was around $850,000 APY, and in 2010 Adam estimated it closer to $900,000 APY. But in 2013, the signing of Philip Wheeler counted against Oakland despite only making the veteran minimum of $700,000 at the time. Perhaps it could have been explained by the fact that he played 98.5% of the snaps on defense in 2012. But in 2014 there were several qualifying low value players that played much less. The most stark example was Brian Leonard qualifying in favor for Cincinnati on a veteran minimum of $715,000 despite only playing in 28.1% of the offensive snaps in 2013. Similarly, Mike Pollak qualified against Cincinnati on a minimum salary benefit contract of $780,000 despite only appearing in 32.4% of 2013’s offensive snaps.

For this reason, I am once again keeping it simple and projecting that, unless there are extra circumstances that would suggest otherwise, players that signed for at least the four year veteran minimum of $730,000 will qualify for 2015.

In addition, because the adjustments for playing time and postseason honors are not nearly as much of a factor as APY is, playing time as represented by offensive or defensive snaps will only be used as a tiebreaker in the case of equal APYs. AdamJT13 did not fully explain how he incorporated playing time in his formula, thus I have little else but this to rely upon. For this reason, I estimate that many of my picks will be out of order, especially in the later rounds. As for postseason honors, I will not be using them in my projections. Even if I did, out of the qualifying players that matter only Aqib Talib and TJ Ward made the Pro Bowl, and as mentioned above, Ward will have some other extenuating circumstances to deal with.

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At this point, with the basics and the methodology laid out, I will set out to give a more detailed projection of the 2015 compensatory draft picks that you can find on OTC’s new draft page. You can find the explanatory post for those 2015 picks here.