Are Compensatory Picks Slowing Down Free Agency?

There’s been plenty of talk in recent years on how the interest on compensatory picks has risen in recent years. One possible negative side effect of such a rise in interest may be that mid to low level unrestricted free agents (UFAs) are having trouble signing with a new team due to fears that they will become compensatory free agents (CFAs) that could cost teams a comp pick for signing them.

Writing for CBS Sports, Jason La Canfora gave a good breakdown on the plight that current UFAs find themselves in:

“All anyone wants to offer now is a minimum-salary benefit deal,” said an agent representing one of the more prominent veterans still on the market. “It’s the same thing from every team – we don’t want to pay more now, and lose a comp pick.”

Another agent said: “The guy who is getting squeezed is the second-tier veteran player. The teams know how cheap the draft picks are, and they can use the comp pick formula for leverage, too, and they know it’s a gamble for the player to wait until after the draft when they don’t count against the formula, because that need might not still be there.”

A third agent said: “Comp picks have become a much bigger factor in free agency. Totally. I hear it much more now than ever before.”

Since I’ve been tracking compensatory picks in real time for the past five offseasons, I thought it would be instructive to look back at a few metrics to see if, and how, the described trend holds up:

Compensatory Free Agent Activity, Before April 1
YearTotal CFAs SignedTeams With Comp Picks At Risk If A CFA Is Signed

In the first metric, we can see that CFA signings are indeed down this year from their pace in the past two seasons. However, in 2015 and 2016 the pace was even slower than it is today in 2019, and that came before comp picks were tradeable, a cited aggravating factor in the slowdown of unrestricted free agency. But on the other hand, it’s instructive to look at the cancellation charts to see where those CFAs are signing. 52 of those 122 CFAs (42%) were signed by just seven teams: the Bills, Jets, Browns, Raiders, Lions, Saints and Cardinals.

This is where the next two columns come in handy as to see where evidence of a slowdown is really coming into play. A total of 15 teams, almost half the league, would either lose a comp pick or have one demoted if they signed a CFA as of now. Furthermore, 9 teams would lose more than a 7th rounder if they signed a CFA at this point. Among the biggest risks would be canceling out a 3rd rounder for the Ravens and Steelers, a 4th rounder for the Rams, Chargers and Eagles, and a 5th rounder for the Bears and Dolphins.

And in addition to those 15 teams, there are others like the Bengals, Chiefs, Cowboys and Bucs that are even on CFAs lost and gained. Those teams may want to hold off now in hopes that another team can sign some of their CFAs in order to open up higher level comp picks (3rd and 4th rounder for the Bucs, a 4th for the Chiefs, and a 5th for the Bengals and Cowboys). The Packers and Falcons are also potentially even in CFAs lost and gained as of now, too. So you could argue that there are 21 teams that have some interest in holding off of CFAs.

My own speculation on why things may be different this year is that more of the teams in the middle of valuing comp picks are becoming more mindful of obtaining them, thus creating a bit of a collective action problem. Teams like the Ravens, Patriots, and the former Ted Thompson Packers long prioritized them, but there were still a majority of teams that did not. This remained true even when a second wave of teams like the Steelers, Bengals, Broncos, Seahawks, 49ers and Rams joined their ranks. But now it may be the case where the majority and minority has flipped, especially when we seems like the Bears and Redskins who traditionally have not cared for comp picks show up on the list. That may be the tipping point that has been felt by NFL observers in this regard.

So if it’s established that there is a problem with free agency grinding to a halt due to compensatory picks, what changes could be made to free up teams to making moves for free agency that wouldn’t hurt their comp pick standing? Here are a few ideas, in order from least to most radical:

  • Significantly move up the deadline for unrestricted free agents to become compensatory free agents. This change has recent precedent when the NFL Management Council moved up the date from June 1 to the second Tuesday after the draft in 2015. The difference in time here helped to lessen front offices from having to execute transactions during the beginning of the dead part of the NFL offseason.

    But when it comes to compensatory picks, most teams have decided long before early to mid May whether or not signing any given CFA is worth cancelling out a comp pick. This is reinforced with the fact that most of the high profile free agents agreeing in principle to contracts before free agency even officially started, and the remainder signing very soon after.

    So a simple way to codify this reality is to move up this date closer to this time year. Something like April 1, two weeks after the start of the new league year, or even 10 days after would allow for a well defined second wave of free agency that could not only help such players sign contracts, but also keep NFL observers paying attention to important league news.

  • Raise the threshold needed for CFAs to qualify for the compensatory formula. As I understand the formula today, that threshold is for a CFA to be ranked within the top half of the league as a whole that has spent at least 10 weeks on a roster during the regular season, with that ranking based upon Average Per Year (APY) as the dominant factor, snap counts as secondary, and postseason honors as a very small factor. As it stands now, an APY of approximately $1 million is needed to qualify, unless that player logs a high level of snaps. That’s not too far above the minimum salary benefit amount of $895,000 for players with 4-6 accrued seasons, and players are naturally reluctant to have to settle for such a deal at this time of year.

    If the Management Council raised the threshold to, say, the top third of the league, the APY needed to qualify this year would be something close to about $2.3 million APY. That’s just a shade above the lowest restricted free agent tender of $2.1 million. This would provide more negotiating room for mid to lower level UFAs to strike deals with teams that have comp picks on the line.

  • Exempt 7th round CFAs signed from canceling out higher valued CFAs lost. This would be a pretty significant change from the very strict rule of the compensatory formula that a CFA signed must always cancel out a CFA lost, even if the difference in value is extreme. But it makes more sense on an intuitive level. For example, many Bucs fans and observers have felt perplexed that signing punter Bradley Pinion to a $2.75 million APY contract (valued in the 7th round) could end up costing Tampa Bay a 3rd round comp pick for losing Kwon Alexander to a monster $13.5 million APY contract.

    In this change, teams could still be eligible to get 7th round comp picks for such CFAs that they lose. (Though it should be noted that these days, 7th round comp picks often miss the 32 pick limit, and in 2016 all 7th rounders missed that cut.) But now, teams could sign someone to a deal for up to around $3 million APY without risking losing a comp pick valued higher than a 7th rounder.

  • Make it more difficult to obtain 3rd and/or 4th round selections. As it stands now, the 2020 NFL Draft would award ten 3rd round comp picks and six 4th round comp picks, exactly half of the total amount. This comes close to the record set in 2017 of eleven 3rd round comp picks and six 4th round comp picks. In contrast, for 2020 there are only two 5th rounders and four 6th rounders on the comp pick board. It’s clear that teams are valuing the higher picks more, so perhaps some disincentive could be placed on those rounds.

    There’s a sliver of precedent here: for reasons that remain mysterious and seem arbitrary, CFAs with ten or more accrued seasons may only net the team that lost them a maximum of a 5th round comp pick. The Management Council could consider tweaking this rule to include more CFAs, or it could raise the threshold for CFAs to be valued at the higher levels–say, needing to be in the top 1% of leaguewide players instead of the top 5% for the 3rd round. If fewer 3rd and 4th round comp picks are awarded, it may encourage teams to be more aggressive in canceling out lower valued comp picks with CFA signings.

  • Abolish compensatory picks. This would of course be the most radical option. It would also be the most difficult, as it would require a change to Art. 6, §2(a) of the Collective Bargaining Agreement where comp picks are clearly spelled out. The owners and the union will likely have bigger priorities when the time to negotiate a new CBA comes around, and if so it may mean that comp picks are something that just lingers as part of the NFL. But if you’re part of the group that argues that compensatory picks do not accomplish their supposed goal of compensating teams that have lost talent in free agency, then it’s clear that abandoning them would end this incentive once and for all.

And on the last note, as we draw closer to this year’s draft, I plan to study whether, and to what extent, obtaining compensatory picks has relation to a team’s ultimate success on the field.