A Quick Overview on Compensatory Picks
When building a roster, a very easy implication to overlook is the impact your signings of today have on your draft capital down the road. After all, many GM's have expectations placed on their shoulders to win now, prompting roster-building decisions that mortgage the team's future in an effort to put out the best possible roster now, even if the given team doesn't realistically have the roster to justify a championship window (I'm looking at you and your shiny new toy, Raiders).
In that regard, Compensatory Picks aren't a sexy thing to scheme around. In the simplest of terms, Compensatory Picks are draft capital awarded to teams that lose more free agents in a given offseason than they acquire, as measured by a player's average dollars per year on their new contract. To see a live chart on how these picks are weighing against each other in this offseason, follow this link to OTC.
In 2022, if Tom Telesco were to make roster-building decisions around the compensatory pick formula, the earliest Tom would see a return on this investment would be 2024. However, given our current spending in this year's free agency and the cap situation of 2023, and the big ol' extension Herbie is earning himself, there has never been a more crucial time for Tom to make some decisions based on the opportunity these picks provide.
Coach Bill Belichick, Champion of the Compensatory Picks
Forty-two picks. Nine 3rd round picks, four 4th round picks, five 5th round picks, fifteen six round picks, and nine seventh round picks. That is the amount of extra draft capital Bill has earned himself in his 22 years coaching the Patriots, averaging nearly two extra picks a draft over that span.
Perhaps it was the success of his first draft, where Bill was gifted four compensatory picks from the previous regime, and a certain 6th round compensatory pick became the GOAT of our league, that led to his falling in love of compensatory picks. Whatever it is, it's been a staple of his roster building since.
My favorite example of Bill truly manipulating the formula was the trade that brought Trent Brown to the Patriots in 2018. Bill traded a 2018 3rd round pick to the 49ers, and in return received Trent Brown and the 49ers' 2018 5th round pick. Playing on a Tom Brady-led offense, Trent Brown increased his market value in his contract year, and went on to sign a top-dollar contract in 2019 with the Raiders that netted the Patriots a 3rd round compensatory pick in 2020. In effect, Bill pushed his 2018 3rd round pick to 2020, and in return gained a solid starting RT during a Superb Owl season AND a 2018 5th round pick.
Bill essentially lays out the strategy for manipulating the compensatory pick formula:
- Don't be afraid to trade, but focus trades on immediate positions of need that require a starter. High-usage rotational players are OK as well, but don't give up more than a 7th or 6th.
- Refrain from signing higher-earning free agents until May 3rd (or a given year's compensatory window). Typically, the window in which signings affect the compensatory pick formula expires sometime around the first week of May. After that, it's fair game to bring in whatever veterans you need to plug some positions of need.
- Don't be afraid to let your stars walk. If there's a tag-and-trade scenario because a given player's market is so great, go for it (he's done this twice, once with Tebucky Jones is 2003 for a 3rd, 4th, and 7th, and again in 2009 when he packaged a tagged Matt Cassel with Mike Vrabel which netted them a 2nd).
- When you know your outgoing free agents won't surpass our incoming signings, GO ALL IN. In 2020, for the first time in what seemed like ages, Bill only had two free agents leaving that would net him a compensatory pick, which was not nearly enough to balance out the amount of spending power Bill had. As a result, Bill signed 8 qualifying free agents. From 2017-2020, Bill only signed a total of 9 qualifying free agents under the compensatory formula. Since the compensatory formula does not punish you for each additional free agent you acquire, once you've determined more free agents will be brought in than let go, it's best to go all-in. Bill spread out those signings across the next four years to ensure he'll have plenty of outgoing assets in each offseason (assuming he doesn't trade them first); one contract expired this year, two will expire next year, two will expire in '24, and three will expire in '25.
The Rams, Who DO Value Draft Picks
Les Snead wearing the "F--- them picks" shirt is quite the deceptive moniker. Sure, the Rams have shown they are willing to deal picks to bring in assets. Given the actual hit rate of first round picks, it's a pretty brilliant strategy if done correctly. However, what is easy to miss is in the 6 years of the McVay/Snead partnership, they have benefitted from 13 compensatory picks, actually averaging more per year than Belichick has over his 22 year career. Those picks have been high value as well, netting: seven 3rds, three 4ths, three 6ths, and one 7th. They are almost as likely, if not more likely, to package these picks as part of their trades, but their ability to let players walk and mitigate how aggressively they pursue free agents has routinely rewarded them with extra draft capital.
What About Our Bolts
As we're aware, compensatory picks are not regularly in discussion for Charger fans. If it felt like the third round pick we received for Phillip was an aberration, you're correct! Under Tom's stewardship from 2013-2019, we only netted TWO compensatory picks, a 5th in 2016 and a 7th in 2018. Two picks in seven seasons is a FAR cry from the examples I laid out above.... essentially what we gained in seven seasons is Bill and Snead's yearly average!
What factors have played into our near absence from the awarding of compensatory picks? Some of this becomes more opinion that fact, but let me take a stab at it:
- Contracts that are heavily backloaded with little dead money, encouraging Tom to cut players before they play out their deal. This is the biggest culprit, in my opinion.
- (Previous) Refusal to trade for actual assets that would fill into starting roles. Trai Turner was somewhat of an exception, but it was a diminishing asset for diminishing asset trade, and his contract made it a high likelihood he wouldn't see the end of the deal. Targeting players on teams that were "selling" or rebuilding that were near the end of their contracts, or are on a contract that can be carried to completion, is the strategy we should be aiming for.
- Stubbornness in roster construction; not aggressively pursuing free agents after the compensatory pick window that could fill major positions of need (such as RT, third safety, and RB2 last year). This also should include quickly realizing when we've missed on a player, and seeking a higher-impact player to replace them (see, Kelly, Rountree, Jackson being our backup RBs last year, while other teams like the Ravens and Titans got more production out of summer and in-season signings). If they aren't likely to be resigning by another team for decent money at the end of their contract and don't serve an above-replacement level role, move on.
Can Tom Telesco Evolve Into A Savvy, Capital-Acquiring GM?
In recent years, there has been evidence of growth as Tom has let many of his previous draft picks walk. In 2021, we gained a third from Phillip's departure, and in 2021 we have a 6th and three 7th's coming our way... not the most impactful rounds, but they could be an asset in rounding out our special teams. However, the Philip situation was a bit of a one-off, and this year we're mostly benefitting from a roster overhaul as a new head coach reconstructs the team in his image.
That being said, my hope is that Tom Telesco wakes up, and realizes the following:
- We've (likely) already surpassed the point of actually gaining compensatory picks in the next draft.
- Our roster, as the Patriots were with Tom Brady, has enough talent to raise the market of players at key positions. Positions like RG, RT, speedy WR, MLB, and RB2(1b) are PRIME areas where a player can join us on a short deal, GREATLY increase their stock, hit free agency and cash in.
- Averaging an extra 2 picks a year as the Rams/Patriots have done creates a rollover of an extra 6-8 drafted players on your roster at any given time. These are players on cheaper contracts, filling in depth and special teams rolls or potentially developing into steals as Sebastian Joesph Day was for the Rams (he was drafted in the 6th, though not with a compensatory pick).
- If we commit this year and open up a little more cap space, we can stack a few more free agents on 1 and 2 year deals that will begin netting us extra "cheap labor" by the time Herbert's new contract eats much of our cap space, and sets us up to cycle through 3-4 years of outgoing free agent surpluses.
Current Compensatory Pick Outlook
As I've mentioned on our comment sections, I have a sheet I am currently using to track our signings, available cap spending, and expected free agent departures. You can check it out here. PLEASE DO, as it will help fill in some blanks if you have questions on how I got to my numbers. (NOTE: This chart is updated up-to the Everett signing, with Austin Johnson's contract estimated. You can click on player's names to view their contracts, and I left notes on the player's whose contracts I adjusted and altered).
After consideration is given to our rookie signings, and a $7,000,000 in-season budget, this is a representation of how much spending power we have and what our free agent cancellation chart looks like:
We have currently brought in more free agents than have signed elsewhere, and I don't expect this to change soon. I also wouldn't be shocked if either Chris Harris, Linval Joseph, or Jared Cook sign under the threshold that nets a team a 7th pick or sign after the compensatory pick timeframe. As such, it makes sense to be to start loading up players on the right side column, and set us up with assets down the road.
2023 Offseason Projections - Get Ready for a Free Agency Snoozer
Based on my current projections, we are already on track to require some restructures and cuts just to fill our roster. Granted, it's very doable, but it is my hope that the lack of current cap space in 2023 is a sign that Tom simply isn't planning on being very active in free agency and is going to focus on the core we having, and letting some players walk in free agency.
Please note: these are rose-colored estimations for their APY's. Guyton wouldn't get 8mil/year now and he's probably my most egregious offense on here, but I'm hoping for some growth and we've watched crazier things happen in free agency lately.
I do not believe we let Derwin walk, but until we extend him I have to keep him here as a reminder that we have to squeeze his contract into that already scary cap space.
Without getting into too many predictions about who may or may not be retained from that list, I think it's safe to say 2-3 of the players in the upper section of the column will likely be walking next off season. As it stands, we aren't set to net too much value in compensatory picks, unless they let Nasir walk and Guyton blows up this season (although he is a RFA next season, and I don't know if an untendered RFA still net a comp pick).
2024 Offseason - Preparing for Herbie
There will be cuts and restructures by this point, but if you look at who we have projected to expire in the 2024 offseason, and account for some/much of that available cap space going to a Herbie-Fully-Loaded contract, it's very likely we have another opportunity to be on the positive side of the compensatory pick formula. That is, of course, if TT doesn't cut some guys first.
Looking at this list, there are likely only 6-7 players that would net a compensatory pick, and I anticipate Feiler and Ekeler will likely be resigned, with Everett and Johnson being a complete unknown. Having a few more contracts set to expire here would ensure we keep the extra picks rolling. We already pushed our chips in on this year, so let's consider signing a couple players to two year deals that benefits this cancelation chart. From there, the cap space we have should be spread between guys that will already resign by this point (Derwin, Herbie), and resigning some of these core players.
Moves That Can Help Us WIN NOW, and Set Us Up Down The Road
So... how can we strategically align ourselves with smart signings that fill our current holes with starters or starter competition at the worst, that can potentially snowball into compensatory picks for the years in which "cheap labor" will be essential to our success?
These moves are reflected on my spreadsheet, under the "DJ Extended" tab.
It doesn't have to happen immediately, but for all four proceeding moves to occur DJ must be extended (if not, all moves except White could occur without any adjustments). If his current cap hit gets rolled into his resigned deal, and he is awarded a 5yr/$78,000,000 contract as Spotrac currently projects, this would be a potential breakdown of how that could look. Please forgive it being listed as "Philip Rivers" on the contract; I did this on all of my recent contract workings so if the player in question does sign or extend, the contract I created doesn't get affected by the new numbers (UNLESS PHIL COMES BACK!).
His cap hit lowers by approximately $3,000,000, giving us a working spending budget of $15,192,785.
The four signings I would make today that would instantly add starting-level players would be (multi-year deals have links to contract breakdown):
- Kyzir White, LB, 2 years/14,000,000. Cap hit of $6,000,000 in 2022.
- Cornelius Lucas, RT, 2 years/6,500,000, Cap hit of $3,000,000 in 2022
- D'Ernest Johnson, HB, 1 year/4,000,000
- Will Hernandez. G, 1 year/2,000,000
- PLEASE NOTE: This FanPost will outlive these players' unemployment. I fully expect all of them to sign elsewhere, and there are substitute players that could replace the ones I've identified. The point of this exercise is to show how 4 available free agents as of March 22nd, 2022, could have a lasting roll-over impact of value on our roster.
Signing these 4 would give us 4 immediate starters (I consider RB1b a starter in most offenses), and potentially 4 additional draft picks in the next 3 years.
Important note: On the spreadsheet, you will see I also shifted 7 veterans outside the top 53 that I believe will either be cut or sent to the practice squad, and shifted our 7 draft picks into the Top 53. This move, along with the DJ Restructure and 4 signings listed above, brings our effective spending power to $1,430,628, and overall cap space to $8,430,628.
How Does 2023 Fit Into the Picture?
As I mentioned before, we are currently projected to have just under $5,000,000 in cap space next year, which after budgets are applied for our rookie pool and in-season moves, quickly nosedives to -$5,024,151.
These look even bleaker when DJ's contract is added to this mess, and the contracts of White and Lucas are still on the books.
However, we can very quickly mitigate these problems and keep our core intact by making 3 moves. On my spreadsheet, the tab labeled "2023 DJ Extended/Restructure(s)" covers this.
As briefly put as possible: we can save $21,000,000 in 2023 by restructuring Linsley and Bosa. For Bosa, I believe it would be smartest to add a void year to spread the $20,000,000 in converted signing bonus over 4 years instead of 3. His cap hit in 2024 would be $4,000,000 higher than the $29,000,000 currently projected, but they have a lot more flexibility in 2024 to make cap-saving moves. Most importantly, Bosa's 2025 hit stays at approximately $30,000,000, but his total dead cap at that point is only 10,000,000 spread over two seasons. For Linsley, he saves $6,000,000 by spreading $9,000,000 in converted bonus over three years, and his top cap hit stays manageable at $20,1000,000 in 2025 with only $5,600,000 in potential dead money.
The last move would be trading or cutting Davis. I actually believe there is a chance he has tradable value next offseason if he does well in his CB2/3 role, with less pressure on him to cover the WR1's. A solid CB2 on a one year deal of 7,400,000 is an asset worth trading for, and although it gives us compensatory formula implications in the next year, it makes sense to capitalize on an opportunity to get whatever we can for him in 2023 draft capital. As his compensatory value likely caps out at a 5th round pick, I would see unloading Davis for a 2023 5th or 6th as a "win."
If TT wanted to retain Davis, there are additional restructures that could happen to do so and help us benefit from Davis-compensatory pick in the following season. Re-working Allen's deal where we give him an extra year and more guaranteed money in exchange for him taking a "pay cut" from his base salary figures would be ideal, but I don't see a restructure as likely since it would set him up with too much dead money and a cap hit of over $31,000,000 in 2024.
Pulling the trigger on these 3 transactions, retaining White and Lucas in 2023, and Derwin's extension gives us the following FA Budget and Compensatory Pick Cancellation chart. Please note, this FA budget has more room to be manipulated, and will create additional space when veterans are pushed out of the Top 53 by the 2023 rookie class. It does budget for the 2023 rookie class AND in-season moves.
Remember: these are loose projections. Some of these players may jump in value after a strong season under Staley.
I believe two but no more than three of these players will be resigned. If TT chooses to not land any qualifying free agents during the compensatory period, that would set us up with 5-6 eligible picks. Teams cap out at 4 compensatory picks, meaning the top 4 picks would likely be awarded (potential consideration for the unaccounted players could boost the round of the picks we do receive).
Where Does That Leave 2024?
The Bosa and Linsley restructures pushed an extra $8,000,000 of cap hit into years 2024 and 2025, but we are in a much stronger position to move money around here. Many players are extension eligible, and looking at our Cap Savings column on the sheet shows you that many contracts have plenty of cushion to negotiate around.
On my spreadsheet's chart, I don't have the 2023 rookie class additional cap hits accounted for here, because there is no concrete way of knowing what they will be in 2024. Instead, I just have the 2022 rookie class, and the rest of the roster rounded out with veteran minimum contracts. That said, there is probably an extra $4,000,000 that should be considered for the 2023 rookies pushing out some of those veteran minimum contracts.
Even so, before any roster moves are made and contracts adjusted, and before Herbert is extended, we are still in a relatively healthy cap situation. I would expect in this year for Herbert's cap hit to actually line up right around $25,000,000 (I'm expecting them to keep it low for the first two years), so it should be noted that some maneuvering of contracts will be necessary, but very manageable.
Our FA budget (before Herbert, with restructures and DJ included) and cancellation chart is as follows:
I believe the team will retain another 3-4 of these players, the most likely being Feiler, Everett, Ekeler, and Johnson. However, there are also likely scenarios where any one of these players is replaced by a former draft pick and allowed to walk in free agency. Either way, given our cap situation and Herbie's contract bearing down on us, this is another year where we could easily have 4-5 eligible compensatory picks for the following draft, some of which are in the 4th and 5th rounds.
Let's say Ekeler and Feiler are retained, and the team decides to roll with McKitty/Parham/2023 or 2024 draft pick at TE. The cancelation chart (before accounting for the 4 pick maximum), could justify two 4ths, a 5th, two 6th's, and a 7th. Of course, many of my projections are going to be off, but I think it's safe to assume we'd be positioned for the full 4 picks, 3 of which are in at least the 4th or 5th round.
Conclusion - Where We Land in 2025 After Bolstering 2023's Roster
Throughout the length of this exercise, I believe we made roster moves that sought to maximize our championship window. Although we made some moves to borrow from future cap space, they were done so in a way that added starting caliber talent without putting them on contracts that would necessitate their release before the contract expired, which I believe is the key to building compensatory picks and thus a deep competitive roster.
Although creating some space in 2022 and 2023 to enable us to sign 4 starters in 2022 may seem like a move that would mortgage the future, making such moves with thought towards our future outgoing free agents and cap situation could net us 4 additional draft picks in 2024, and 3 or 4 higher-value compensatory draft picks in 2025.
With 2025 being the first year I anticipate Herbert's extension starts to accelerate into one of, if not our biggest, cap hits in any given year (compared against the rest of our team), I believe the value of having an extra 7 or 8 players on our roster drafted from '24 and '25 will help create one of the deepest rosters we've enjoyed in a very long time, and hopefully sets us up with continued mindfulness towards winning the compensatory battle by remembering:
- Only dip into compensatory-eligible free agents waters when you're ready to go ALL IN, or can manage to stay within a cancellation value that doesn't exceed the 7th round
- Focus on filling starting depth chart holes (that can't/shouldn't be filled with draft picks) with trades that can be bought low on one or two year deals, or veterans signed after May 3rd.
- Refrain from designing contracts for our players that encourages you to cut them before they finish the contract.
- As a bonus... if you know you are situated to cut a player in the following season and thus will not have an opportunity to benefit from a compensatory pick, trade him while he does still have value to another team.