MLB compensation picks explained

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While most of the regularly scheduled selections in the MLB Draft order will get the most attention, MLB compensation picks can also help change a team’s fortunes.

MLB compensation picks also have slot values which dictate the recommended bonus each franchise should pay the player selected at that pick. These picks are essentially the “Platform 9 ¾” of the draft, to coin a Harry Potter reference; they come in between regularly scheduled rounds.

MLB compensation picks

Regular picks are determined by a team’s regular season record in the prior season. However, compensatory picks can be determined by a few different factors.

This makes them a little bit more nuanced, and it can be hard to forecast when a team is entitled to receive one. We’ll help shine the light on some of the scenarios where teams receive MLB compensation picks.

How do MLB compensation picks work?

To put it as simply as possible, MLB compensation picks can be awarded to teams when a franchise has lost a player.


For example, a compensatory pick can be awarded to a team who extends a qualifying offer to a player, but ends up declining it. A recent example of this process played out during free agency this past winter, with the Cincinnati Reds and All-Star pitcher Trevor Bauer. The Reds gave Bauer a qualifying offer, but he wanted to enter free agency with the hopes of securing a larger long term deal.

The Los Angeles Dodgers gave Bauer the mammoth contract he was seeking, the Reds lost one of the best pitchers in the game. As a result, Cincinnati was awarded a compensatory draft pick.

What are the competitive balance rounds in the MLB draft?

There are two competitive balance rounds included in the 2021 MLB Draft for compensation picks.

Competitive Balance Round A, which is where the aforementioned Reds’ pick is situated, is in between rounds one and two of the draft. There are seven picks in this mini round, which were awarded to the Reds, Miami Marlins, Detroit Tigers, Milwaukee Brewers, Tampa Bay Rays, the Reds again (they have a second pick in this frame), and the Minnesota Twins.

There is also a Competitive Balance Round B, which takes place in between the second and third round of the draft. Eight teams will have selections in Round B, due to the loss of certain players from the 2020 roster.


Which picks do teams lose for exceeding the luxury tax?

The luxury tax is used in many sports to help curtail the spending of some of the highest revenue generating teams.

In MLB, the spending threshold for player contracts in the 2021 season was determined as $210 million. If clubs exceed that amount, their draft picks for subsequent seasons can be affected.

When clubs spend $40 million or more above the threshold, their first pick is sent back 10 spots in the ensuing MLB Draft. Teams also can receive reduced compensation in the Competitive Balance rounds if their payroll is over a certain threshold, should they lose a free agent.

Can MLB teams trade compensation picks?

While standard draft selections cannot be traded by MLB clubs, their compensatory picks can be dealt.

It’s an interesting rule, because in the other major sports, draft capital is often used as a significant bargaining tool among franchises.

It’s unclear what the logic of this rule is, but one theory is that compensatory picks are “extra” selections over and above the regular picks, and teams should be able to do what they see fit with them.

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