When the salary cap era of the NFL began in 1993, many changes came to the league other than just the eponym of this era. One of those changes was the introduction of unrestricted free agency. Another was to reduce the number of rounds in the draft from twelve to seven. However, while there have been officially seven rounds ever since, in truth the total number of draft picks equate to eight rounds. This is due to advent of compensatory draft picks, a entire round’s worth of picks that are distributed among the ends of rounds 3 through 7 that are awarded to teams that lose certain Unrestricted Free Agents (known as Compensatory Free Agents) to other teams.

The formula used to award compensatory draft picks, developed by the NFL Management Council, had never been publicly revealed until the passage of the 2020 Collective Agreement. However, in the years since 1994 outside observers have been able to determine much of how the formula works, and have created projections in an effort to demystify how compensatory picks work, a process that has confused many an NFL fan.

From 2001 to 2010, the person who has brought the most public awareness to how the compensatory draft pick formula works is someone known as AdamJT13. For nine of those ten years, he would annually write up a detailed projection of which picks he expected to be award to which teams. His contributions have been valuable to gain a better understanding of the compensatory formula. Unfortunately, when the CBA expired in 2011, Adam declined to give a projection for that year, and understandably so given that we had no idea whether the new CBA would even include compensatory picks. He has not offered a detailed projection since 2010, though he is still active on Twitter.

The advent of OTC, however, with its excellent wealth of contract data, has provided a way to continue the projection of compensatory picks. Since 2015, our goal here is to attempt to carry on the excellent work that AdamJT13 has done, by citing his work to offer our own projections for future compensatory picks. Using OTC’s web interface, we have also automatically programmed compensatory pick projections–not just in the past going back to 2015, but also for future compensatory pick offerings. When free agency begins along with the new league year, free agent signings that qualify for the compensatory pick formula will be denoted as such, and as free agency proceeds you will be able to get real time updates and a broad idea on which teams could earn which compensatory picks for the next draft. It will be broad because happenings during the rest of the league year (such as training camp and in-season cuts, injuries, amount of playing time, and postseason honors) could alter the picks further.

It is important to remember that future projections will not known for sure what the picks will be until the NFL Management Council issues its official release. It is always anticipated that several of the projected picks will not be exactly correct, and even Adam himself could not project with full accuracy. But there is good confidence that these projections will give a general idea as to where teams stand in earning compensatory picks.

The Basics

Appendix V of the 2020 Collective Bargaining Agreement contains the binding bylaws of the compensatory pick system. App. V, §1 explains the basics as follows:

[A] 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 […] prior to 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.

1 Prior to 2015, this date was June 1, and from 2015-2019 this date was the second Tuesday after the NFL Draft.

2 Under the 2011 CBA, this threshold was the top 50%.

In plain English, if a team loses more players that qualify as CFAs than it signs during free agency, that team is eligible to be awarded compensatory picks in the following NFL draft.

It is important to note that only certain players qualify for the compensatory formula. Those are only players whose contracts expire. Players who are cut are the most common example of free agents ineligible to become CFAs, but other methods of disqualification, such as a Restricted Free Agent not given a tender, also exist. In its most general sense, players only become Compensatory Free Agents if they are free to leave their old team against that team’s will.

Methodology

App. V, §2 lays out the process of calculating the value of CFAs. §2(a) begins the calculation as follows to all players in the league

Start with the Average Per Year (APY) of the contract signed. Subtract from the APY any money that the compensatory formula does not count3. Rank these players by adjusted APY in descending order, and assign points to each player, equal to [number of leaguewide players]-[rank]. Add anywhere from 25 to 100 points for players who played a percentage of snaps on offense or defense in the range of 25% to 100%. (Kickers and punters are given a different point addition unrelated to snap counts.) Add 20 or 5 points for postseason honors as determined by the AP’s All Pro list, and the PFWA’s All NFL/All Conference list.

3 Prior to the 2020 CBA, it had been determined that workout bonuses, incentives, and salary escalators were common devices that the compensatory formula does not count. However, App. V, §2(a) of the 2020 CBA makes clear that these devices will now count if they are considered Likely To Be Earned, or are earned in the player’s first season of his new contract.

Qualifying CFAs And Assigning Them To A Round

Once the Final Numerical Value (FNV) as described above has been tallied, each UFA is given a value that either assigns him as a CFA to a particular round, ranging from the 3rd to the 7th, or does not qualify him as a CFA at all. App. V, §3(b) sets these round cutoffs in a percentile manner, as follows:

Round Highest Percentile Lowest Percentile 3rd 100th 95th (top 5%) 4th below 95th (top 10%) 90th (top 10%) 5th below 90th (top 10%) 85th (top 15%) 6th below 85th (top 15%) 75th (top 25%) 7th below 75th (top 25%) 65th (top 35%)4 Non-CFA below 65th (top 35%)4 lowest ranked player

4 As mentioned above, in the 2011 CBA the 7th Round/Qualification cutoff was instead at 50%. Also, prior to the 2011 CBA this cutoff may have been somewhere higher than 50%, given that fewer players were found to qualify under AdamJT13’s projections than under the 2011 CBA.

Cancel Out CFAs Lost With CFAs Gained For Each Team

Once each team’s list of CFAs lost and gained are determined and valued, one-to-one cancellations are applied. Cancellations work as follows, as stated in App. V, §3(a):

A CFA gained by a team cancels out the highest-valued available CFA lost that has the same round valuation of the CFA gained. If there is no available CFA lost in the same round as the CFA gained, the CFA gained will instead cancel out the highest-available CFA lost with a lower round value. A CFA gained will only cancel out a CFA lost with a higher draft order if there are no other CFAs lost available to cancel out.

Any team that has more CFAs lost than CFAs gained will then be eligible for compensatory picks for the CFAs lost that were not cancelled out by CFAs gained.

For a visual representation of how cancellations work, please visit our Compensatory Draft Picks Cancellation Chart to gain a better understanding of this complex process.

Additional Compensatory Picks

In addition to the regular compensatory picks described above, there are two other types of compensatory picks that may potentially be awarded:

The formula will occasionally award a “net value” compensatory pick, as explained in App. V, §5, for a team if that team loses and gains an equal number of CFAs, but the sum of the FNV of the CFAs lost is 300 or more points greater than the sum of the FNV of the CFAs gained. Net value compensatory picks are always 7th round picks, and they are always placed in order immediately after the regular 7th round compensatory picks.

If, after awarding both regular and net value compensatory picks, there are less than 32 picks awarded, the formula will award “supplemental” compensatory picks to ensure that the total number of compensatory picks is always exactly 32. These supplemental picks are awarded in the order of what would be the eighth round of the draft, if an eighth round existed.

Compensatory Pick Limits

There are two key restrictions that may limit the number of compensatory picks a team may receive:

There is a strict limit of 32 compensatory picks that are awarded every year. If the formula initially awards more than 32 compensatory picks, all picks ranked 33rd and below are not awarded, although the league will still recognize that those picks would have otherwise been eligible for compensation. (There has only been one exception to this: as noted in the Additional Rules below a 33rd comp pick was collectively bargained upon for 2016.)

A team may not be awarded any more than four compensatory picks in one year. If the formula initially awards a team more than four, the lowest of the picks over the per-team limit of four are not awarded, although the league will still recognize that those picks would have otherwise been eligible for compensation.

Additional Rules

In the past, transition tagged players qualified for the compensatory formula. See Steve Hutchinson in 2007, who qualified in favor of Seattle despite being transition tagged and lost to Minnesota as part of the infamous “poison pill” incident in which the Seahawks retaliated by signing RFA Nate Burleson to a similar “poison pill” offer sheet. However, in 2016 the NFL and NFLPA agreed to change this rule, and now transition tagged players should no longer qualify. That year, this allowed Buffalo to get a 4th round comp pick for Da’Norris Searcy by removing Charles Clay (signed on a transition tag offer sheet from Miami) from the compensatory formula. As part of the agreement, 33 comp picks were awarded in 2016 instead of the standard 32.

Prior to the 2020 CBA, players who have options declined by their former teams qualified for the compensatory formula, even though the team had a method to keep them under contract. For one example, see Donte Stallworth in 2009, who qualified in favor of New England despite having an option on his contract declined. However, the 2020 has closed the loophole. However, App. V, §8 now makes explicit that such players, as well as any player who does not complete the “Maximum Possible Term” of the contract will not be eligible to become CFAs. This similarly applies to any player whose contract was shortened via renegotiation.

Players who have ten or more accrued seasons may only yield a maximum of a 5th round compensatory pick, even if their actual value would otherwise be assigned higher. See Alan Faneca in 2009, who only awarded Pittsburgh with a 5th round pick instead of a 3rd despite his contract, playing time, and postseason honors. However, App. V, §4 revealed that this rule does not apply to quarterbacks.

Starting with the 2020 CBA, under App. V, §10, players who sign Veteran Salary Benefit contracts will not be eligible to become CFAs.

Also starting with the 2020 CBA, under App. V, §11, teams may exclude UFAs from the compensatory formula if the player signs a 1 year contract for less than approximately $1.75 million.

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You may find OTC’s current compensatory draft pick projections on our draft page.