2014 MLB Draft Preview: the slot system and compensation rounds explained

Maddie Meyer

The more you know...

Last week, community member twinssdfan asked me a question:

What is the difference between the Compensation round and the compensation balance A picks?
Seems the Royals are kind of stacked up!
And please explain the slot system.

The Slot System

I'll tackle the second request first. The slot system is the means by which Major League Baseball determines draft order. In the simplest terms, it's just like the NFL draft: the worst team picks first, and the champion picks last. But naturally there are exceptions to this rule.

Signing a free agent who has declined a qualifying offer

First, I suggest reading the above. Essentially, teams lose a draft pick by signing a free agent who has declined a qualifying offer. That draft pick doesn't go to anybody else, it just disappears. If the Twins are set to draft at number 26 (I'm funny, right?) and the Rays are set to draft at 27, when Minnesota signs one of these players they lose that pick and now Tampa would pick at 26.

The slight exception to this rule is that the first ten teams in the draft have their first pick protected. Minnesota, in a real life example this time, would have lost their second round pick by signing someone like Stephen Drew or Kendry Morales and kept the number five overall pick.

In the situation where a team signs a second or a third player on this list, they lose their next pick - whether that's in one of the compensation rounds, or in the next full round. Essentially, it's pretty painful for a team to sign anyone who has declined a qualifying offer. Especially if that team loses their first-round pick, and even more especially if they sign more than one. Teams in the top ten of the draft, however, do have some slight incentive.

Failing to sign a draft pick in the prior season

In the 2013 draft, for example, the Blue Jays didn't sign their first round pick at number ten overall. They've been awarded the number eleven overall pick this year as compensation. The rule is drafting at the same spot in the following season, plus one spot. This isn't a bad result for Toronto, who will be picking at nine and eleven come Thursday, but no doubt most teams would just rather have their selections actually sign.

Finally, all slots are assigned a monetary value by Major League Baseball. These numbers are added up through the first ten rounds to give each team their budget for signing their picks in the first ten rounds (plus any player who signs a $100,000+ bonus thereafter). Therefore, the value assigned to each slot is baseball's "recommended signing bonus". This is why teams are concerned about "signability." Read the link below to find out more about the monetary system and the associated penalties for violating baseball's imposed limitations.

Compensation Rounds

Compensation Round A

We just talked about teams losing a draft pick by signing a player who has declined the qualifying offer. Well, the team that lost the player gets a pick in this round, which immediately follows the first full round. The Mariners could have a pick in Comp Round A if Kendry Morales signs elsewhere before the draft. (He won't.) The Yankees lost Curtis Granderson, which would have earned them a compensation pick, but they lost that pick by signing Jacoby Ellsbury, which in turn gives Boston a compensation pick.

It's not as complicated as it sounds. Mostly, teams who lose a player via the qualifying offer will get a compensation pick: the Royals lost Ervin Santana, and will pick 28th overall as a result. Where it gets a bit complicated is with teams like the Yankees. They could have had two compensation picks, but signed three players who declined qualifying offers - Brian McCann, Jacoby Ellsbury, and Carlos Beltran - and as a result New York lost not just their first round pick, but both comp round selections. The Yankees have been robbing Peter to pay Paul for years, and it's safe to say it's catching up with them.

This season, Compensation Round A constitutes picks 28 to 34 overall.

Compensatory Balance Picks, Round A & Round B

The compensatory balance pick rounds have nothing to do with departing free agents and instead have to do with market size. They are designed to, you guessed it, maintain competitive balance. Teams in the smallest markets around the league are awarded these extra selections. There are still two rounds, and they're still after the first and after the second rounds, with Round A coming after the free agent compensation round and Round B coming directly after the full second round.

Teams qualifying for these selections go into a lottery to determine where they will pick and how many picks they receive. Competitive Balance Round A will be picks 35 through 41, while Round B will be picks 69 through 74.

What's fun about these picks is that, unlike any other pick in the draft (including the free agent compensation round), these picks can be traded. The Astros and Pirates have picked up selections in Round A, while Arizona gets an extra pick in Round B. The Twins, sadly, have no extra selections.

I hope this explains the slot system as well as the compensation rounds for the MLB Draft. If you have any questions, drop them in the comments and I'll do my best to answer them.

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