In the fast-paced world of the NFL, where every move in the free agent market can shift the balance of power, there is a strategic tool that allows teams to mitigate losses and strengthen their rosters: “compensatory picks“.
Introduced in 1994 alongside free agency, these picks give teams the chance to earn additional selections in the following year’s draft if they lose more unrestricted free agents than they sign.
The formula for determining their allocation is a closely guarded secret by the league, but it is based on factors such as the player’s contract value, playing time and individual achievements of the players who depart.
What is a compensatory pick?
A compensatory pick is a unique draft selection granted to teams that lose more valuable players to free agency than they sign. Think of it as a form of compensation for the loss of talent, designed to maintain competitive balance in the league.
A detail of the video board and stage during the 2012 NFL Draft. (Source: Chris Chambers/Getty Images)
These picks are awarded at the end of rounds 3 through 7 of the draft and are not based on any trade or player transaction made by the team. Instead, the NFL uses a complex formula to determine which teams deserve extra picks—and how many—based on their player losses.
How they are calculated
The process for calculating compensatory picks is anything but straightforward. The league uses a formula that takes into account a player’s contract value, playing time and individual performance.
The more lucrative the contract a player signs with another team, and the more they contribute to their new squad, the higher the compensatory pick that the losing team could receive.
The NFL also factors in a team’s overall free-agent activity—signing more expensive players can offset the picks awarded for losing talent. The exact formula remains shrouded in mystery, but the goal is to strike a balance, giving teams that lose players a fair shot at replenishing their rosters.
Max number per team
Although compensatory picks are a great way for teams to gain an edge, there’s a cap on how many they can receive. A team can be awarded a maximum of four compensatory picks in a single draft, and these picks cannot come earlier than the third round.
A helmet with the 2006 NFL Draft logo is shown on April 29, 2006. (Source: Chris Trotman/Getty Images)
This restriction ensures that teams don’t excessively rely on free-agent departures to enhance their draft position, and it keeps the system from being abused. The league limits the total number of compensatory picks to preserve the integrity of the draft and avoid overcrowding it with too many additional selections.
Notable examples
Some of the most successful NFL teams have found a goldmine in compensatory picks. One of the most notable examples is the Baltimore Ravens, who have long been praised for their knack for maximizing compensatory picks.
In 2021, they were awarded four compensatory selections, including a third-round pick—one of the highest given that year—after losing players like Matt Judon and Yannick Ngakoue to free agency.
Another example comes from the San Francisco 49ers, who have strategically allowed key players to leave, knowing they’d recoup valuable picks. In 2022, they received a third-round compensatory pick after losing Robbie Gould to free agency.
These examples underscore the critical role compensatory picks can play in roster building, allowing teams to stay competitive even when they lose talent to other organizations. For teams with savvy front offices, compensatory picks are more than just a safety net—they’re a valuable tool for long-term success.
