How do compensatory picks work and will the Bengals have any in 2016?

One score and three years ago the NFL brought forth, upon this league, a new paradigm, conceived in unrestricted free agency, a salary cap, and a shorter seven round draft which included something called "compensatory picks".

For those unfamiliar with the math of the Gettysburg Address, we are referring to 1993, 23 years ago, when Jurassic Park was wowing viewers with cutting edge CGI, Beanie Babies were an inexplicable fad, Bill Clinton was being sworn in as the latest president of the United States, and the NFL was making changes that would shape the league for years to come.

But back to compensatory draft picks, in all, 32 of these picks were added to the NFL Draft beginning the following spring, with the 1994 draft.

What are Compensatory Draft Picks?

The picks are compensation for losing qualifying unrestricted free agents through free agency. Basically, the more you lose in free agency, in terms of number of players and quality of players, the more compensation you receive in draft picks.

The draft has seven rounds consisting of 32 picks each, which are awarded in the traditional "worst to first" format, with the worst team receiving the highest pick in each round, and working down to the Super Bowl winner, who receives the last pick in each round. The draft also has these 32 compensatory picks sprinkled in, distributed at the ends of rounds 3 through 7.

Historically, compensatory draft picks have been untradeable. But this season, the NFL decided to allow these picks to be tradable, beginning with the 2017 NFL draft.

How is it Determined Who Receive Compensatory Draft Picks?

There are some secrets that are so closely guarded; we may never fully know the truth regarding them. For example, we may never know what happened in Roswell, New Mexico back in 1947. We may never know the Colonel’s secret recipe. And we may never know the exact formula which the NFL Management Council uses for assigning compensatory draft picks. But even though we are not privy to the exact workings of the compensatory draft pick formula, we have more than two decades of the NFL granting compensatory picks. And from this, we can form a reasonable theory regarding how it is done.

Essentially the formula is set up so that a team is compensated to offset losing more and/or better free agents than they added during the previous season. But not every free agent signing counts toward this formula, and qualifies as a "compensatory free agent".

Generally, an unrestricted free agent who was not released by his previous team, and signed during the free agency period counts toward the compensation equation. There are additional factors regarding the loss of restricted free agents, and injury settlements, and so forth, which determine whether a player qualifies, but essentially, it can be condensed to the statement that a free agent will typically count as a compensatory free agent if they are able to leave their previous team, with that team being unable to prevent the loss.

After the NFL has decided which free agents count as compensatory free agents, the next step is to assign a value, or rating to each free agent. The primary factor used in evaluating the compensatory free agents' ratings seems to be the average annual value of their new contract. This rating is then slightly adjusted based on the playing time that the player received. It is then further adjusted for any postseason honors, such as Pro Bowl or All-Pro selections, that the player receives.

After each compensatory free agent is rated based on these criteria, they are ranked against the rest of the players in the league who are on rosters at the end of the season. Depending on where the compensatory free agents rank versus the league, they will be graded as either a third, fourth, fifth, sixth, or seventh round compensatory draft pick. For example, Ndamukong Suh’s average annual value around $20 million is one of the highest in the league, and would grade him as a third round compensatory pick. Whereas Marshall Newhouse’s value of $1.5 million would likely grade as a seventh round pick.

After the free agents have been qualified as compensatory free agents, rated based on their average annual value, and graded as being equivalent to a round three though seven compensatory pick, the next step is to cancel out each team’s compensatory free agent losses versus their compensatory free agent additions, and see if they will be awarded any compensation.

If a team adds a compensatory free agent with a seventh round grade, and loses a compensatory free agent with a seventh round grade, they cancel out, and the team receives no compensation. But it’s not always that simple. Often a team will add and lose multiple compensatory free agents, with varying rounds assigned to them. In these cases, there is a set of convoluted rules in place for handling the cancellations.

Here are a few examples of how these rules would work. The numbers in the tables represent the round which the compensatory free agents would be valued as.

Free Agent Added	Free Agent Lost	Compensatory Pick
3	3
	7	7

Free Agent Added	Free Agent Lost	Compensatory Pick
	3	3
5	7

Free Agent Added	Free Agent Lost	Compensatory Pick
	3	3
7	7

Free Agent Added	Free Agent Lost	Compensatory Pick
	3	3
4	7
	7	7

Free Agent Added	Free Agent Lost	Compensatory Pick
6	3	0

In the last example, where the team cancels out a compensatory free agent of a much higher value than they lost, they will sometimes receive a seventh round pick to make up for the cancellation being so uneven.

After all of the cancellations have taken place, if a team has any remaining compensatory free agents lost, they will be awarded with compensatory draft picks – although there are limits on the number of picks a team can receive, and the total number of picks awarded by the league. A team cannot be awarded any more than four compensatory draft picks. If the cancellations would have netted them five or more picks, the lowest value picks are removed from that team. Also, a maximum of 32 total compensatory picks are doled out by the NFL per year. If the cancellations for all of the teams in the league result in 33 or more compensatory picks due, only the 32 picks with the highest value are awarded. If the result in the cancellations results in less than 32 picks, the league will award supplemental picks to get the number to 32 total picks. These supplemental picks follow the traditional "worst to first" draft order, as if there was an "eighth round".

History of Bengals’ Compensatory Selections

Since compensatory draft picks were added to the 1994 NFL draft, the Bengals have received 23 such picks, averaging just over one per year. They have spread their selections pretty evenly with 12 defensive players, and 11 offensive players, and have covered every non-special teams position with their picks.

Most recently, the Bengals received a third round and fourth round compensatory pick for the losses of Michael Johnson and Anthony Collins to the Tampa Bay Buccaneers. The Bengals signed no compensatory free agents to offset those losses. The Bengals then used those picks on P.J. Dawson and Marcus Hardison.

For the 2014 draft, the Bengals lost Manny Lawson, Bruce Gradkowski, Dan Skuta, Josh Brown, and Pat Sims, while adding Josh Johnson, Alex Smith, and Mike Pollack. After the cancellations, Lawson brought them a sixth round selection, which was used on Marquis Flowers, and Pat Sims brought them a seventh round pick, which was used to draft Lavelle Westbrooks.

The list of every Bengals’ compensatory selection is listed below:

Year	Name	Name	Round
1994	Steve Shine	LB	3
1995	-	-	-
1996	-	-	-
1997	-	-	-
1998	Damian Vaughn	TE	7
1999	Scott Covington	QB	7
2000	-	-	-
2001	-	-	-
2002	-	-	-
2003	Elton Patterson	DT	7
2004	Landon Johnson	LB	3
2005	-	-	-
2006	-	-	-
2007	Nedu Ndukwe	S	7
2008	Andre Caldwell	WR	3
2008	Matt Sherry	TE	6
2008	Angelo Craig	DE	7
2008	Mario Urrutia	WR	7
2009	Chase Coffman	TE	3
2009	Bernard Scott	RB	6
2009	Clinton McDonald	DT	7
2009	Freddie Brown	WR	7
2010	Brandon Ghee	CB	3
2010	Roderick Muckelroy	LB	4
2011	Jay Finley	RB	7
2012	-	-	-
2013	Reid Fragel	OL	7
2013	T.J. Johnson	OL	7
2014	Marquis Flowers	LB	6
2014	Lavelle Westbrooks	CB	7
2015	P.J. Dawson	LB	3
2015	Marcus Hardison	DT	4

Two interesting findings stand out when looking at the list of players the Bengals have selected with their compensatory picks. The first is that of late, the Bengals have become much more dependent on making compensatory picks part of their roster strategy. After only acquiring six compensatory picks in the first fourteen years of their existence, the Bengals have had at least one compensatory pick in nine of the last ten drafts, and have had multiple compensatory picks in seven of the last nine drafts.

The second thing that stands out is that for all their well earned praise for being a team who tends to draft fairly well, the Bengals really seem to struggle when making compensatory pick selections. Very few of the Bengals’ compensatory picks have ever contributed much for them. Not that one can expect them to strike gold with a compensatory pick like Tom Brady, Brian Dawkins, or Marques Colston, but with over a quarter of their picks coming in round 3, one could expect more than what the Bengals have gotten.

It makes you wonder if the Bengals treat compensatory picks different than their regular picks, and therefore use a less effective draft strategy when making those selections. It also makes you wonder if the Bengals would be better off being more active in free agency, instead of passing on free agents in favor of receiving compensatory picks, which fail to yield much production for them. Though, many of their younger compensatory draft pick players still have time to prove themselves.

Projecting the 2016 Bengals’ Compensatory Draft Picks

The Bengals signed A.J. Hawk, Michael Johnson, Denarius Moore, and Pat Sims. Meanwhile, they lost Taylor Mays, Josh Johnson, Terence Newman, and Marshall Newhouse. But not all of those free agent moves count as compensatory free agents.

Both A.J. Hawk and Michael Johnson were released by their former teams, and would not be considered compensatory free agents added. Denarius Moore was not signed until August, which is too late to count as a compensatory addition. Taylor Mays and Josh Johnson were signed too late by the teams who acquired them, and thus, they would not count as lost compensatory free agents.

The Bengals have two players who would qualify as compensatory free agent losses: Terence Newman, and Marshall Newhouse. They also have one added compensatory free agent, Pat Sims.

Newman’s average annual value is estimated to be $2.5 million, and Newhouse’s is $1.4 million. This would place them both with round seven grades. Sims has a value of about $900,000, and would also give him a seventh round grade. The addition of Sims cancels out the highest rated loss in the same round, so the addition of Sims would cancel out the loss of Newman, meaning the Bengals would have a total gain/loss of one lost free agent, Newhouse.

Since Newhouse has a seventh round grade, the Bengals would be set to gain a seventh round compensatory draft pick. But, the NFL only awards 32 total compensatory picks, and with Newhouse’s average value around $1.4 million, he would probably fall outside of the top 32, and therefore fail to bring the Bengals a seventh round compensatory pick. The league does make adjustments for playing time, and he did start 14 games for the Giants this past season. So there is a small possibility that he could climb into the top 32.

Ultimately, the Bengals’ best case scenario is a very late seventh round compensatory pick. If they did receive a pick, it would probably be the last one in the whole draft. Although, it’s more likely they will receive no compensatory picks in the 2016 NFL draft.