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Default Free Agent Types Explained

From ESPN's Keith Law:
Explaining Type A, B free agents

Tuesday, November 28, 2006 | Feedback | Print Entry

Some top free agents bring a small amount of compensation back to their former clubs when they sign with new teams in the form of extra picks in the subsequent Rule 4 draft. Although this rule was ostensibly designed to give clubs some kind of compensation for losing good players, especially lower-payroll clubs who couldn't or wouldn't retain those top free agents, it was also put in place to produce a slight drag on free-agent salaries. Not only has it clearly failed on both of those goals, but it has slightly distorted the market for free agents, making certain players more or less appealing than they otherwise would be.

The compensation rules were simplified in the most recent collective bargaining agreement, so that now there are only three types of players:

Type A players, ranked in the top 30 percent of players at their positions. A team that signs a Type A player gives its top draft pick to the club that the player is leaving. The "losing" club also receives a supplemental pick in the "sandwich" round between the first and second rounds.

Type B players, ranked below the top 30 percent but in the top 50 percent of players at their positions. A team that loses a Type B player receives a supplemental pick, but the signing team does not lose any picks.

All other players, who carry no compensation at all. There had previously been a third class of "Type C" players, but that was eliminated in the new CBA.

The two compensation classes will shrink beginning in the winter after the 2007 season; the Type A pool will only comprise players in the top 20 percent of their positions, and the Type B pool will only comprise players in the second quintile (21-40 percent). The rankings come from a formula that MLB and the players' union agreed on in the early 1990s, entrusting Elias with the task of generating the statistical rating for each player. The formula -- the specific components of which no one seems to know -- looks at player statistics from the preceding two seasons, combining both bulk statistics (that is, ones that increase with playing time) and simple rate statistics (such as batting average). It then ranks players in each of those categories and then assigns each player a points value inversely related to his ranking. In this respect, the formula is based on where a player ranks in relation to his peers in each category -- not how the player actually performed. If you led all players at your position in home runs over the past two years, it wouldn't matter if you hit 40 or 80 -- you'd get the same number of points.

If a team has a draft pick in the first half of the first round (that is, in the top 15 picks), its first-round pick is protected from the compensation process, meaning that the highest pick it can lose for signing a Type A free agent is its second-round pick. This has already affected three clubs -- the Cubs (for Alfonso Soriano), Orioles (for Danys Baez) and Indians (for David Dellucci) all signed Type A free agents, but lost their second-round picks rather than their first-round picks. Given the rapidly expanding sandwich round and the weak college crop in the 2007 draft, it's likely that one or more of those clubs was more willing to surrender that second-round pick knowing that its value this year is low.

If a team signs more than one Type A free agent, its picks are parceled out to the "losing" clubs in an order determined by the ratings of the free agents the team signed. For example, Baltimore signed Baez, whose rating was 69.810, and Chad Bradford, whose rating was 62.890. Since Baltimore's first-round pick was protected, the Orioles lost their second-round pick to Atlanta (for Baez) and then their third-round pick to the Mets (for Bradford). If, however, the Orioles were to sign a Type A free agent with a rating higher than Baez's rating, then that player's former club would get Baltimore's second-round pick and Atlanta and the Mets would get the O's third- and fourth-round picks respectively.

The picks in the sandwich round follow the normal draft order, meaning that it takes place in reverse order of finish (but only includes teams that have received extra picks). However, a team that has received two sandwich picks must wait until every team that picks in the round has selected once before it makes its second pick; a team that has received three picks must wait until all teams with two or more picks have selected twice; and so on.

There is also a set of quotas governing how many Type A and B players one club may sign as free agents in one winter, with that number determined by the total number of Type A and B players who elect free agency in that offseason.

If fewer than 14 Type A or B players elect free agency, no club may sign more than one such player.

If 15-38 Type A or B players elect free agency, no club may sign more than two such players.

If 39-62 Type A or B players elect free agency, no club may sign more than three such players.

If 63 or more Type A or B players elect free agency, "the Club quotas shall be increased accordingly," according to the basic agreement.

Since 93 Type A or B free agents filed for free agency this winter, the per-club quota this offseason is eight. However, each team may sign as many Type A or B free agents as it loses in any particular winter, even if those signings would put it over the quota for that winter. At this writing, only Baltimore has signed three such free agents (Baez, Bradford, and Jamie Walker, who was a Type B).

The rating system groups players into five categories -- catchers, starting pitchers, relief pitchers, infielders other than first basemen, and first basemen/outfielders/designated hitters. Players are ranked in five to seven statistical categories, with the specific categories varying by their position grouping (e.g., there are no fielding stats used in the 1B/OF/DH group, but the catcher and infielder groups each include two defensive stats). Cumulative statistics may be adjusted for players who spent time on the disabled list, restoring stats for up to 60 days of missed playing time.

Each player is then given a point total for each statistical category that is inversely related to his actual ranking. For example, if there are 100 starting pitchers in the ranking, then the pitcher with the lowest ERA gets 100 points, the pitcher with the second-lowest ERA gets 99 points, and so on, until it reaches the pitcher with the highest ERA, who gets one point just for writing his name. This system has an obvious flaw, of course, as it gives no weight to the distance between any two players: If the top pitcher's ERA is 0.1 or 0.01 or 1.0 runs better than the ERA of the next-best pitcher, it doesn't matter, as he still only gets one extra point. Point totals within each position are then scaled to make 100 a perfect score.

I think he does a pretty good job of explaining the situation.
"Life is what happens to you while you're busy making other plans...." John Lennon

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