Posted by Zach Sanders on Sunday, November 29, 2009 at 12:16 am

For the second offseason in a row, the free agent compensation system will limit the market for a handful of players. To those of you unaware of the free agent compensation system, here are some brief points to educate you.

• The system is used to compensate teams unable to sign their top players leaving via free agency.
• Players are rated by Elias using their past two seasons production, and are assigned an A, B, or no rating.
• Teams losing A players recieve a first round pick from the team that signs him, as well as a compensatory pick between the first and second round.
• Teams losing B players recieve only a compensatory pick.
• Picks will only be awarded if the team losing the player offered the player arbitration, and the player declined.

Last year, Orlando Hudson found himself in a predicament. He was a Type-A free agent, meaning he would cost their new team a draft pick to sign them. However, no team felt that Hudson was worth the money he were asking for AND their top draft pick. He eventually signed a deal worth $3.4 million with the Dodgers, who forfeited their first round pick to the Diamondbacks. If not for his Type-A status, Hudson would have been able to command a higher salary then he did. The same thing happened to Orlando Hudson, who eventually settled on a $4 million deal with the A’s.

This year, a couple of players will be praying their team doesn’t offer them arbitration, forcing their new team to give up draft picks. Those players:

Bengie Molina- Molina is already on the downside of his career, and a team isn’t going to want to pay his hefty asking price and give up a draft pick. However, the Giants don’t want to take a chance of Molina accepting arb and returning, so he will probably luck out on this front.

Billy Wagner- A old fireballer coming off major surgery is not worth draft picks. The Red Sox look like they will offer him arb, as they wouldn’t mind bringing him back for 2010.

LaTroy Hawkins – A first round draft pick for a middle reliever? Are you crazy?

Placido Polanco- Polanco is good, but he knows that the market will be thin. If the Tigers offer him arb, he’ll most likely accept (as he should).

Octavio Dotel- Dotel is a good setup man, but his age and role in the bullpen make it hard to swallow giving up a pick to get him. The ChiSox seem more likely to stay away from Dotel, not offering him arbitration.

Type-B free agents don’t have to worry about this, because their new team doesn’t forfeit any of their own picks. For the players listed above, playing well (in the eyes of Elias) may end up hurting them this offseason.

I’m not one of the people who wants to get rid of this system. In fact, I think it’s fair to reward smaller market teams who can’t afford to keep their players. However, the formula used to compute player rankings in out of date and worthless, so the system needs to be reformed when the next CBA comes up.