You heard it here first:  compensatory sandwich picks suck...at least when it comes as compensation for a star-caliber player lost to free agency.  

Let's make it clear what we're talking about here, as well as what we are not:  compensatory picks--here I'm talking about first round choices and picks extended at the end of the first round--are provided to teams when they lose Type A free agents.  Sometimes those Type A free agents, due to the vagaries of the free agent classification system--are significantly less than star players.  That is not what we're talking about.  What we are talking about are those cases when a team has a recognized star-caliber player approaching his free agent walk year.  We're talking about players to whom other teams are willing to offer multiple year contracts at rates approaching if not exceeding eight figures per annum.

If you're an Orioles fan, you can point to several recent instances that match the above description, with one currently pending.  As of this writing, Brian Roberts is still a member of the Baltimore Orioles and he is still unsigned past 2009.  Roberts will serve as a case study of why major league teams--particularly major league teams without reasonable hope of contending in the approaching season--absolutely should not allow star players to reach their walk seasons unsigned and untraded.  (Mid-season trades are always a possibility, but the trading team's leverage decreases by the day and the players' value typically does as well.)  The fact of the matter is that the talent represented by compensatory picks awarded a team losing a star player to free agency very rarely match that of the player lost.  In fact, the compensation picks seldom turn into anything of independent value at all, let alone value matching that of the star-caliber free agent.  And the first round pick that's the other half of the compensatory package?  It's not exactly strawberries and cream either.  

But first, the sandwich pick.  Consider the following table:

The first thing that jumps out from the table is that a grand total of four players chosen as sandwich picks--interestingly including our case study subject, Brian Roberts--have developed into major league stars using my classification system (the others are Johnny Damon, David Wright and Huston Street...and Street is admittedly looking like a bigger and bigger stretch as a star every day).  That's four of 260 total picks, or 1.5%.  Only 18 players (roughly an additional 7%) have turned into contributing level players.  (It's worth noting, as always, that these values will almost certainly rise modestly as time goes by and recently drafted players begin to filter into the major leagues in greater numbers.)  So roughly 8.5% of sandwich picks to date have turned into contributing level players or better.  Even if that number ultimately creeps up to 10% or so, consider the implications of settling for a sandwich pick as compensation for a star-caliber free agent.

And what about that first round compensatory pick, you ask?  Well, if that pick is from a team in the first half of the first round, the pick is protected.  The best a team can do if it obtains a first round compensatory choice is receive the 16th pick in the draft.  The exact rules regarding first round pick compensation are somewhat byzantine:  the pick itself depends on the draft slot of the drafting team and the number of Type A free agents the drafting team selects.  It's impossible to state with any certainty what a team would receive, in a generic scenario, in compensation.  Suffice to say that the best case scenario is a pick somewhere in the lower half of the first round.  In other words, the best compensation a team can receive would be a draft pick slotted somewhere from #16 to #30.

In the last 19 years, here's the overall major league breakdown of players selected from 16 to 30:

Even accounting for the creeping up in the top cells of the table as time goes by, we're probably talking about a total "decent return" rate (that is star or contributor) of about 20%, with a star rate somewhere in the neighborhood of 4%.  Not surprisingly, this is better than the sandwich pick rate (after all, these are higher drafting slots), but it doesn't--or shouldn't--give anyone the warm and fuzzies.  And remember, this kind of return represents the best case scenario for the team losing the Type A free agent.

So let's put all of this in perspective.  By what stretch of anyone's imagination does it make sense (again, particularly for those teams with little hope of contending in the upcoming season) to allow a star caliber player go for (roughly) a 1 in 17 chance of--some day--matching that player's value in the best of circumstances?  (That's an estimate of the chances of getting one star player out of one first round and one sandwich compensatory pick.) Or accepting a 1 in 4 chance of getting something of value--again, some day--in return...in the very best of circumstances?  (The approximate chances of one star or contributing level player out of the same pair of compensation picks.)  That, ladies and gentlemen, is a true sucker's bet.

Look at the average sandwich pick drafting slot, just to illustrate the point of what a team is getting with that guaranteed half of the compensation equation :  the average major league compensatory "end of first round" pick since 1990 has been approximately 37.5.  Basically, as a practical matter, a compensatory sandwich pick is somewhere in the first half of the second round.  That's right, a sandwich pick is a second round pick.  That's what a team gets when a Type A free agent signs elsewhere.  Does that seem like a fair trade for a star player?  A few teams--the Mets, for instance, who got Bobby Jones and Jay Payton in addition to David Wright amongst their eight sandwich picks--seem to have defied the odds.  But on the one hand, it's never a good idea to view the exception as the rule...and on the other hand, I wouldn't exactly crow about Bobby Jones and Jay Payton.

Settling for compensatory draft picks as a way of "making up" for losing star players to free agency, I submit, is one way that bad teams stay bad.  Star players don't grow on trees.  Star players even more rarely are the property of bad teams (part of the reason they're bad in the first place).  Accepting a couple of draft picks as compensation for losing one of these rare commodities is a sure fire way to prolong a talent deficit.

In short, teams have three options regarding what to do with star caliber players entering their free agent walk years:

1) trade them for fair value

2) re-sign them

3) let them walk and receive the dreaded compensation picks

The situation that the Orioles currently face with Brian Roberts is exactly the kind of situation described above and the Orioles are exactly the kind of team that can least afford to make this kind of move...and yet here we are, several days into the new year (we're closer to the start of spring training, at this point, than we are to the end of the 2008 postseason) and Roberts is neither traded nor re-signed.  The Orioles' position of leverage--which wasn't all that strong to begin with since they entered the off-season with the situation unresolved-- is declining with each passing day.  

I've laid out the sandwich pick part of the equation in some detail above.  In the past, I've hinted at the fact that the notion that "a first round pick is a first round pick" is incorrect.  It matters a great deal where in the first round a team drafts in terms of assessing the possibility of obtaining significant help down the road.  (For a bit more information along these lines, see this Calculus from 2004.)  We'll look into this with much greater specificity in the next installment of this series.  Suffice to say for now that, as hinted in the summary table above, obtaining help from a draft pick in the back half of the first round--the best a team can get when it loses a Type A free agent--is a longshot and the odds of getting anything approaching like ability in the exchange are extremely slim.

I think there's a sense people have that more or less goes as follows:  we're losing (insert name of star player here), but we're getting two high draft picks in exchange!  We might get two star players out of that!   Well, it's hypothetically possible, but all the available evidence suggests it's like rolling snake eyes on consecutive tosses of the dice; that is to say, it's very, very unlikely.  (In fact, the odds are worse than consecutive snake eye rolls, but I digress.)  The mistake that permeates this line of thinking is assuming that a best case scenario is likely when it is anything but.  It's rather like thinking that having a couple of lotto tickets means you should start planning for what to do with all that cash that'll roll in when you win.

Bad teams stay bad by repeatedly trading off poorly when it comes to talent.  Allowing star players to walk via free agency is a virtual guarantee of a bad return on talent.  Allowing this to happen three times in nine years is the hallmark of losing.  Stay tuned.

In part three of the draft series we'll take a look at the distinction between first round drafting slots and what the data implies for approaches to compiling and retaining major league talent.

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