How do you determine the monetary value of something unknown? Through a lot of Google searches! Competitive balance picks are one of baseball’s many little-known features. There are many ways to acquire them, you can trade them for some reason, and they are also a way of giving the little guys a gift that says ‘I’m sorry’ when a bigger guy takes their lunch money (good players in free agency). This question would likely have already been answered if MLB allowed teams to trade their draft picks like most other professional sports leagues. However, since only comp picks are allowed to be traded we have only a few examples of this happening and they all occurred in the last decade or so. Inside this article, you will also find the deepest dive into the Gavin Lux to the Reds trade you will ever find because I know that’s what you really wanted.
First, let’s break down what comp picks are, how you get one of these special gifts, and everything in between.
Competitive Balance Picks
-Round A: Occurs between the first and second rounds
-Round B: Occurs between the second and third rounds
-These picks come from a formula to give bad teams in bad markets more good players to balance out the MLB
-Formula combines winning percentage, market scores, and revenue generation
-The ‘worst’ 6 teams by this formula get Comp A picks, and the next teams get Comp B picks
-Teams change every year for the most part
The PPI Comp Pick
-Prospect Performance Incentive
-Designed to disincentivize service time manipulation of really good prospects.
-To qualify for the PPI you must be in the top 100 of two-thirds of ESPN, MLB.com, and BaseballAmerica’s top 100 prospect lists (weird)
-Player must achieve 172 days of service time in rookie year to be eligible (not in MLB ~2 weeks)
-PPI eligibility is gone if a player signs an extension before debuting (Chourio)
-You get a PPI if your player wins the AL or NL Rookie of the Year
-You get a PPI if your player places in the top three for the AL or NL MVP before qualifying for arbitration
-You get a PPI if your player places in the top three for the AL or NL Cy Young Award before qualifying for arbitration
-One PPI pick per player and per team each year
-Example: Julio beat out Witt Jr for the PPI ROY pick in 2022-23. Witt Jr finished top 3 in MVP pre-arb in 2024 with his continued PPI eligibility, leading the Royals to get a PPI pick in 2025.
-This pick goes before all QO and competitive balance picks, typically in the 27-32 range
Compensation Pick Due to Free Agent Leaving
-Cannot Trade. While it is a ‘comp’ pick it stands for compensation, not competitive balance
-Occurs if a team loses a free agent they extend the qualifying offer to (less than 10% accept)
-If the team losing the player is above the CBT (competitive balance tax) threshold the comp pick will be between the fourth and fifth rounds (I am coining this Comp Round E)
-If the team losing the player receives revenue-sharing money and their player signs for over 50 million, the pick will be between Round 1 and Comp Balance Round A (Comp Round AA?). If the player signs for less than 50 mil, the pick will come right before Comp Balance Round B
-If the team losing the player does not receive revenue sharing and does not exceed CBT, the pick will come between Round 2 and Comp Balance Round B.
Note: Comp picks are awarded in order of last year's record, with the worst finishing team having the earliest picks.
Comp Pick Due to Drafted Player Not Signing
-Comp pick you CAN’T trade, also stands for compensation in this case
-The Brady Aiken rule (The Kumar Rocker rule for us young bucks)
-You get a draft pick one spot behind your previous year's slot if your player does not sign
-Only applies to the first three rounds of the draft
Order of Operation Every Round:
1- Draft Picks
2- PPI Picks (only applies to rd 1)
3- Compensation Picks
4- Competitive Balance Round Picks
Okay, I think housekeeping is finished now. Since 2013 when comp picks were introduced, they have been traded 23 times, or roughly twice per year. Some notable trades involving comp picks lately include the Reds sending a Comp A for Gavin Lux, The Diamondbacks including a Comp B for Josh Naylor, and the Orioles sending a Comp A to Milwaukee for Corbin Burnes.
Compensatory picks are most often used alongside a package of other players. They act as a high-upside prospect that a team might not currently have. Let’s examine the Reds trading for Gavin Lux, as an example. In exchange for Lux, the Reds traded Mike Sirota, a highly touted 2024 3rd-round pick, and their Comp A pick, which should land at 41 in next year's draft. For the purpose of this exercise let's imagine that the Reds pick would’ve landed somewhere around their 8th-ranked prospect in 2025. Well, taking a look at their top 8 prospects, there is a significant drop-off after 8. It is quite possible they were unwilling to move someone like Chase Petty or Alfredo Duno whom they have built stock in for the likes of Lux, so instead they traded a pick that has similar value to those players without the years of work.
I think this answers one question we are seeking to answer with this exercise, the why. Trading a draft pick is easier than trading a player because it is an unknown entity versus a known player. A good business strategy tells you to choose the known thing ten times out of ten. A team acquiring a comp pick can get a young lottery ticket, in a high round, that THEY drafted rather than another team. Feels like a win-win scenario to me!
Let's Get to Some Answers
Rather than calculate the WAR from the trades of previous comp picks, we’re going to reverse engineer this to assume how MLB franchises value each of their draft picks. This is removing the ability for teams to obviously sign players under or over slot value, something we can’t predict. This part of the exercise revolves around figuring out how much comp picks are worth in WAR and $, on average.
A general rule one could take is to multiply slot value by around 7-10 to calculate how much a player is projected to be worth to a team over their career. I think that is an aggressive take, we will instead use projected WAR to calculate our comp pick values. In the 2024-25 off-season teams are paying roughly 8 million per 1 WAR, so this will be our guiding number. All slot values I reference will be based on 2024 draft slot values. Please note that $/WAR numbers change every year but stay within a rough bubble where everything can be compared from year to year. It’s also important to note that there is a different number of comp picks almost every year, starting at a different number based on what teams lose draft picks or are penalized by the luxury tax.
Before I give you some actual answers, let’s play a quick game of what is worth the most money…
- A Gulfstream G280 Jet
- A Van Gogh painting
- A Private Island in the Caribbean
- One Comp A MLB Draft pick
Wow! Smart guy! The Comp A MLB draft pick is the most valuable item on the board! Let’s explain why…
When looking at Comp Round A and where those pics generally land, we see an average Comp A pick in 2024 having a slot value of 2.73 million dollars. The average WAR of a player drafted in this same range of picks is 4.35 for a career. When we add that every WAR is worth 8 million dollars this year, a Comp A pick is worth roughly 34.8 million dollars to an MLB team. Yes, this is worth more than the private jet or private island, what a world we live in.
Now for Comp Round B. The slot value for a Comp B pick in 2024 is roughly 1.15 million, with the average WAR of those draft picks being 2.7. The math leads us to a Comp B pick being worth 21.6 million dollars to an MLB team.
If you have been exposed to previous dollar value marks for players on trade sites or MLB stat pages, please throw them out the window as we are now working on RasmussenValue (nice. not a real thing). The value I will be using could be more closely associated with Fangraphs Dollars - WAR value, but using my own, more amateur calculations.
Putting These Numbers Into Context
Knowing the dollar value for these picks helps, but let's add some context to show you how this all works. Let us revisit our previously mentioned Gavin Lux trade. While I do not specialize in projecting a player's career WAR from their age 26 seasons on, I think this one is fairly straightforward as Lux has a good floor and a pretty low ceiling (forget the 2024 second half wRC+, he won’t ever be a 4+ WAR player through a full year).
Gavin Lux is going to be 27 in 2025, with a career-best season in 2022 of 2.7 WAR. He likely projects to be a below-average defender based on WAR for the rest of his career after taking a dip in 2024 and missing 2023 due to injury. I find it unlikely he will have a year in his career above 3 WAR despite his age due to his now poor defense and shaky bat. Combining Steamer, ZiPS, THE BAT, and OOPSY projections, Lux is projected for only 1 WAR in 2025. To be nice let's say through the rest of his prime his average WAR will land between 0.5 and 2.5 per year. Giving him the benefit of the doubt let's say he plays until he’s 33, with a standard aging curve for a player of his age. I took the liberty of giving him a bounceback 2026-27 before continuing his decline. Here’s what we get when looking ahead:
This could be a generous projection or a stupid one, but it is in fact a projection based on science. This would project Lux to account for 9.0 WAR for the rest of his career. This projection feels extremely generous for someone who is only projected to have 1.0 WAR in his prime in 2025, but I would rather project Lux too high than too low for this exercise. That would equal 72 million dollars in future value. But wait, Lux doesn’t play for free so let's project future career earnings too. Using Spotrac, we can see Lux’s current market value is roughly 7 million dollars per year. That would fall almost directly in line with his projected 1.0 WAR in 2024. I’ll project Lux to earn roughly 4.5 million in his last year of arbitration in 2026, followed by a 28 million dollar contract for 4 years when he hits free agency. Our graph would tell us he plays for one more year after that, which we’ll say he plays for 3 million in a bench role at age 33. In total, Lux would get paid 38.8 million dollars for the rest of his career given this estimate. Comparing this to our projected 72 million in future value, Lux is worth a surplus of 33.2 million dollars.
Would the Reds value him this highly when trading for him? Certainly not. They likely will see how he plays over the next two years while waiting to decide whether to extend him once he reaches free agency. Given these circumstances let's set the line for Lux’s career seasons with the Reds at 2.99. With our previous math Lux would get paid 14.8 million in those 2.99 seasons, being worth 4.9 WAR. After more math, his surplus value in the next 3 years (his prime) would be 24.4 million dollars in value for the Reds. Don’t ask how we got here, just know that we did. Now back to the trade itself that landed Lux.
Mike Sirota, the other piece headed to LA was the 87th pick in 2024. A player at that draft slot can project to have a career WAR of roughly 1.9. Therefore, Sirota is worth 9.9 million dollars to the Dodgers. After already establishing the Comp A pick is worth 34.8 million dollars, it leads us to this conclusion:
Los Angeles Dodgers Receive:
-Mike Sirota ($9.9M)
-Competitive Balance Round A Pick ($34.8M)
Total Value Received: $44.7M
Cincinnati Reds Received
-Gavin Lux ($24.4M)
Total Value Received: $24.4M
While you could easily say that the Dodgers won this trade, we have to take the spread of outcomes into account (and a few other missing variables). Lux is much more likely to actually be worth 24.4 million than both Sirota and the Comp A pick hitting average value. Draft picks are obviously a much more unknown variable. Their average value is being bolstered by superstars with huge WAR totals more than it’s being weighed down by 0 career WAR guys that never debut. The last thing to consider in this exercise is that we have deducted value from Lux due to his contract, but not from the Comp A pick or Sirota. We could take away a few dollars from each of them based on the signing bonus, but projecting a 2024 or 25 draft pick’s salary when they are 18 is a foolish game. If I were to take my best estimate after looking at some average salary numbers, the average pay for a guy in Sirota’s draft slot would be around 3.5 million for a career, including the signing bonus. For the Comp A pick, the average salary would be roughly 9 million (inflated so highly due to draft pedigree and likely more upside, plus a few comp draftees with huge contracts). If we take away those numbers the Dodgers won this trade by roughly 7.8 million dollars. Given that Lux is the more sure thing than two draft picks, this trade appears very even for both sides. Imagine that, after all that math and thinking the Dodgers fleeced the little guy Reds, both MLB front offices actually know exactly what they’re doing!
Los Angeles Dodgers Receive:
-Mike Sirota ($9.9M-3.5M) = 6.4M
-Competitive Balance Round A Pick ($34.8M-9.5M) = 25.3M
Total Value Received: Actually 31.7 Million Dollars
Cincinnati Reds Received
-Gavin Lux ($24.4M)
Total Value Received: $24.4M
Another Trade Example, Less Talking
On July 11th, 2022 the Royals sent their Comp A pick to the Braves for Drew Waters, CJ Alexander, and Andrew Hoffman. The $/WAR in 2022 was similar to 2024, at roughly 8 million per WAR.
Atlanta Braves Received
Competitive Balance Round A Pick (34.8M-9.5M)
Total Value Received: 25.3M
Kansas City Royals Received
Drew Waters (1.2 WAR)
CJ Alexander (-0.3 WAR)
Andrew Hoffman (not debuted)
Total Value Received: 7M
On paper, it is easy to say the Braves won this trade despite trading their at-the-time #1 prospect Drew Waters to the Royals. However, we haven’t seen the Braves Comp A pick debut yet in J.R Ritchie, a very promising pitcher ending at A+ last year. If Ritchie never makes it, the Royals can still technically ‘win’ this trade. However, we can project Ritchie to likely earn at least a couple of WAR (or a lot more) when he debuts making this trade a heavy KC loss (I played against Ritchie in high school, he was very good and still is). Waters is slated for a bench role or possible DFA in the future, Alexander was released this past year, and Hoffman had a 6 ERA at AAA. The value of the unknown is still yet to make its case in this deal, however, it certainly leans one way.
See where we have Ritchie and his scouting report in our Top 20 Braves Prospects Below!
Rhys White
Formula Talk
That took a little longer than expected but we now know all of the factors that go into comp pics, their value, and how they might be viewed by MLB front offices. This exercise gets a bit blind at some point, knowing that we can’t project future draft picks very certainly and can project their future earnings even less so. With that being said, here's an equation of sorts for valuing Comp picks. You could use the same line of reasoning to make value received for trades like I did with Lux.
Comp A Value: (Average WAR for Draft Pick x 8) - (Signing Bonus + 9*) = value in $
*for comp B picks, replace 9 with 4.5
To get this ‘RasmussenValue’ total for a current player, you have to project their future career WAR (helpful to use past player comparisons for this), and their future career earnings (use Sportrac, inflation, and common sense). Remember, when mocking a trade with this value system, note that draft picks and recently drafted players should be dinged slightly for their uncertainty, as we did in the Lux deal.
Concluding
The limitations of my system are plentiful. First of all, a better way of doing this would be to calculate WAR based on the signing bonus rather than the draft slot. These values are not publicly available in totality and would be a great deal of work to calculate a specific signing bonus project to WAR (and not relevant). This system does not account for teams going under or over slot but instead bases everything on averages. Another limitation is the difference between the 28th pick and the 40th pick. Both could technically be in Comp Round A but carry many different values. My system puts these two picks on the same level when they likely should not be. There are plenty of more limitations that you can absolutely point out to me, but we got the answers we were looking for.
Comp A and even Comp B picks hold immense value, especially since they are the only tradeable draft assets teams possess. We often see them used accordingly, showing MLB teams are way ahead of me and have figured out the value these picks hold. I see small-market and big-market teams benefitting equally from trading for Comp picks. Teams like the Dodgers and Mets who consistently lose draft picks for signing qualified free agents should look to acquire these picks so they still have high-profile draft picks every year. They also tend to have more resources to trade from as they can replenish MLB talent more easily in free agency. Small market teams like the Brewers or Rays benefit from these trades as they can trade MLB talent to reduce payroll for something of similar value that carries no price tag except future upside. Trading away a comp pick should only be done in a win-now position when you have no other assets of equal value that you are willing to trade. If I were an MLB team, I would be all over acquiring these picks leading up to the 2025 draft this summer and in the future.
Sources:
Paraball Notes. (2024, January 31). DollarWAR in the 2024–2025 MLB free agency market. Paraball Notes. https://www.paraballnotes.com/blog/dollarwar-in-the-20242025-mlb-free-agency-market
Authors Unknown. (2020). Predicting player performance using biomechanical and statistical models. Journal of Sports Analytics. https://journals.sagepub.com/doi/10.3233/JSA-200586
Authors Unknown. (2020). Predicting player performance using biomechanical and statistical models. Journal of Sports Analytics. IOS Press. https://content.iospress.com/articles/journal-of-sports-analytics/jsa200586
Major League Baseball. (2024, January 25). MLB Draft 2024 bonus pick values. MLB.com. https://www.mlb.com/news/mlb-draft-2024-bonus-pick-values
Major League Baseball. (n.d.). Competitive balance draft picks. MLB.com. https://www.mlb.com/glossary/transactions/competitive-balance-draft-picks
Wikipedia contributors. (2024, January 31). Compensatory picks. Wikipedia, The Free Encyclopedia. https://en.wikipedia.org/wiki/Compensatory_picks
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