Teams Could Seek Compensation Free Agent Loophole

WEDNESDAY: MLBTR's Tim Dierkes says (on Twitter) teams would not be permitted to make sign-and-trade deals to avoid the draft pick compensation rules. MLB would view it as collusion.

MONDAY: Some executives are already anticipating that clubs will make an effort to find a loophole for free agents attached to draft pick compensation according to ESPN's Buster Olney (Insider req'd). Forfeiting a draft pick for a free agent also means forfeiting the draft pool money associated with that pick, which is very valuable in this age of restricted draft spending.

Olney says teams have already internally discussed a modified sign-and-trade scenario, and he uses the Indians as an example. Since Cleveland has a protected first round pick and forfeited their second rounder to sign Nick Swisher, the next compensation free agent they sign will cause them to lose just a third rounder. They could sign a compensation free agent, then trade that player to another club in a pre-arranged deal, preumably for something deemed a bit more valuable than a third round pick.

The Yankees explored sign-and-trade scenarios with the Diamondbacks for Carl Pavano and Grant Balfour during the 2010-2011 offseason. Michael Bourn, Kyle Lohse, Rafael Soriano, and Adam LaRoche are the remaining unsigned compensation free agents, and there has been a limited market for all four this winter despite their on-field value. Players signed as free agents can not be traded until after June 15th without their written consent, so they would have to be on board with a sign-and-trade scenario.

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