The draft is the place where teams should be at their most equal. Yes, differing abilities in scouting departments and cash flow separate the field, but each team, in theory, has its shot at new talent coming up. The worst teams from the year before get to choose earlier, and the teams that are already doing well select from what remains.
That wasn't enough, though, especially for teams who lost the players they drafted and developed down the road to the clubs with deeper pockets, thanks to free agency. Compensation arose out of this, so that the teams who (again, in theory) selected and developed top talent, but could not afford to keep it, would be given additional chances to stockpile prospects with the draft.
Did compensation work as planned during the previous collective bargaining agreement, though? Given the extensive changes made to the system, the quick answer is "No." There are many reasons behind the problems with the previous compensation setup, the most significant of which was the ability to stockpile players that were tickets to compensatory picks. The teams with the money to hold on to these players -- the same teams who were able to pry talent away from poorer teams, bringing about compensation in the first place -- were often the benefactors of this system, not the less fortunate the system was meant to help. The table below shows how many first round (sandwich included) compensation picks each team received over the life of the last CBA, broken down by year:
|Avg. Comp Picks||1.1||0.8||0.8||0.5||1.3||4.5|
No one would accuse the Blue Jays, Red Sox, Rangers, or Angels of being small-market (though, to be fair, the Rangers did have financial issues that necessitated an ownership change during 2010). The Rays are second in total picks during the last CBA, but almost all of that is due to 2011's draft, when they lost Carl Crawford, as well as their entire bullpen, to free agency. You would expect the Rays here, as well as the sixth-ranked Padres, but to no one's surprise (besides the people who authored the previous CBA), it's the teams with a combination of smarts and money that dominate a program meant to help those lacking one or both of those qualities.
The average number of compensation picks through the last CBA (combined) was 4.5, but only 10 of the 30 teams were over that average. It was skewed by the extreme numbers the top-ranking teams put up, as the reality was that teams generally didn't have a lot of them. But if they did have any, they had tons of them.
That doesn't mean that the teams who received no compensation picks, or very few, were screwed by the system completely. The Athletics, Pirates, Orioles, Royals, Indians, and Marlins all made trades, whether during the off-season or at the trade deadline, unloading quality players in exchange for prospects, salary relief, or both. This allowed the player's new team to enjoy the extra draft picks, while possibly giving his old team more MLB-ready talent, or better prospects than they might have received in a shallower draft pool. This didn't always work out: ask the Pirates about the return for Jason Bay.
It's not necessarily the right strategy, but it's a strategy. And it's one that can no longer be employed under the new CBA, as players need to be on the same team all year in order to be compensation-eligible. This will keep the Red Sox from acquiring players like Billy Wagner, who was a useful reliever from the deadline onward in 2009, but was more useful in that he gave them two first round picks the next June. It will also stop the Blue Jays from trading for Miguel Olivo once the season has ended, declining his option, offering him arbitration, and then enjoying the draft pick he qualified for.
It's to be seen if the new compensation system can be exploited as it was in its previous iteration. The fact teams can't stockpile these picks through mid-season trades is a hindrance to that. While losing the Elias Rankings in favor of qualifying contracts means mid-tier veterans can sign more easily each winter, no longer tied to the Type-A status that made them unappealing, it might limit the number of compensation picks further as teams decline to extend a qualifying offer. This is more likely to harm the poor, given they have more at risk by offering the qualifying deal in the first place to a player they might not actually want back.
The small market teams get a lottery to help make up for this, with the 10 lowest entered into a six-pick lottery that occurs after the first compensation round. The Athletics and their ilk can no longer trade their qualifying players at the deadline, but at least they will get an opportunity for extra picks each year as part of a competitive balance initiative that the previous CBA never figured out. Even Alex Anthopoulos can't find a loophole in that.