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Do Teams who Exploit the Compensatory Pick Formula Have a Competitive Advantage?

By David Connors @DConBlitz

CDP teams have made from 1995-2000 and their winning percentage (CDP=Compensatory Draft Pick)

Introduction

The Compensatory Draft Pick was first introduced to the NFL in 1993 and the first compensatory picks were awarded to teams in the 1995 NFL Rookie Draft. Were teams that exploited the picks seeing success early? I observed trends of teams’ success in the late 90s and compared that to the compensatory picks each team received from the year 1995-to 2000. In my observations, I focused on how teams did compared to other teams in their division since those teams play each other six times every season. Teams that best exploit the compensatory pick formula are likely to have an advantage against teams that do not.


Compensatory Draft Pick

The compensatory picks were first awarded in 1995. Just to refresh what the compensatory pick is, it is 32 additional picks to the NFL rookie draft that are awarded to NFL teams based on a formula that essentially tracks talent out as compared to talent in for each team during the free-agent period of the offseason. To put it another way, the Cardinals did not extend Christian Kirk once his contract expired at the offset of last season. He signed the largest contract of any free agent during the 2022 free-agent period so the Cardinals will be awarded a 3rd round compensatory pick in the 2023 NFL rookie draft. It is stated in the NFL collective bargaining agreement as follows: “Compensatory Free Agent (“CFA”) shall be defined as an Unrestricted Free Agent (“UFA”) who: (i) signed with a new Club during the prior free agency signing period […] before 4:00 p.m., New York time, on the Monday following the NFL Draft for that League Year1 […]; and (ii) ranked within the top 35% 2 of all League players […]. Clubs that lose to other Clubs a greater number of CFAs than they sign or acquire from other Clubs shall be eligible to receive a Compensatory Draft Selection in the College Draft to be held in the following League Year subject to the provisions set forth below” (Tretter, 2020). To put it simply, if a team loses more than it gains, they get additional draft picks in the rookie draft in the following year.


Early Trends

Teams still treat the compensatory pick formula differently today. The Los Angeles Rams have utilized it to still get an influx of young talent for their team even though they have made it a habit to trade off their day 1 and early day 2 picks. The Saints, however, rarely capitalize on the additional picks. When the rule was initially introduced there were teams that immediately shaped their free agency method to best utilize the picks. If you look at the table provided to the right, you will see the teams getting the most compensatory picks were more often than the top teams in their respective division. In the NFC East, the Dallas Cowboys made 16 compensatory picks averaging in the fourth round, and they were the only team in their division to have a winning percentage over fifty percent. Even though the Tennessee Titans made fewer compensatory picks than the Jacksonville Jaguars, the picks they were receiving were averaging more than 2 rounds earlier than the Jaguars.


The biggest outlier from this research is the Arizona Cardinals who were awarded 10 compensatory picks from 1995-to 2000, had the second-worst record. There are several variables to be considered like poor early draft picks for the Cardinals. However, The Colts, Bengals, Jets, and Bears all made the fewest compensatory for all their respective divisions, and all had the worst winning percentage for said divisions. The Baltimore Ravens make an interesting case study for showing how valuable the compensatory picks can be.


Case Study: The Baltimore Ravens

By the year 2000, the Baltimore Ravens had been awarded 5 compensatory picks, which is 8 less than their division rival, the Pittsburgh Steelers. At that time the Ravens had a 45% winning percentage which was 11% worse than the Steelers. They were coming from four straight seasons without a winning record. Since the turn of the century, the Ravens have exploited the compensatory draft formula better than any team in the NFL. They have made 52 compensatory draft picks since the year 2000. The team with the second most, The Packers has not made that many in their entire team history. Since the turn of the century, the Ravens have had a winning percentage of just a hair under 60% and have won two Super Bowls, and are now one of the premier franchises in the NFL.


The NFL has a resource they offer to give teams additional opportunities to bring in young talent in the NFL Draft. Drafting NFL players are already a dart throw, it seems obvious that as a team, they would want as many darts to throw at the board as possible. Especially when teams are paying their star QBs over 30% of their allotted salary cap. Teams who best exploit the NFL compensatory pick formula tend to have more success over time than teams that do not.


Case Study: Los Angeles Rams

The reigning Super Bowl champions have not made a 1st round draft pick since Jared Goff…SINCE JARED GOFF!!! Yet here they sit, Super Bowl champions. There have been drafts when the Rams didn't even make a pick until the 3rd round. How do they fill their roster? Compensatory picks. Since 2017, the Rams averaged 9.6 picks every draft. That's without making a single 1st round pick in that time. The Rams have used the 1st round picks to get their top-end talent like Aaron Donald and Matthew Stafford. They allow players like Von Miller, Corey Littleton, and John Johnson to leave in free agency to guarantee early compensatory picks every year to fill in the mid-level talent on their team and add depth where they need it. Can they sustain this lack of top-end cheap talent from the top of the draft? That's will have to be seen, however, do not think just because the Rams do not make early picks, they are lacking in an influx of rookies.


What Have We Learned

Teams who exploit the compensatory pick formula are more likely to be successful. The Jaguars have not made a compensatory draft pick in 14 years, and have had the league's worst record for 2 straight years. Even though the Saints were considered a strong roster, they were never quite able to get over the hump to being an elite team. They too rarely make compensatory picks. The teams at the top are the ones who are not letting this resource go to waste.


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