Here is a formula for calculating Compensatory Draft Picks with an example....

Compensatory Pick Calculations

Although nobody knows the actual formula the NFL uses to compute which teams receive which compensatory draft picks, after studying several drafts, the basics are explained below. While this method isn’t 100% exact, it is close.

The Bills current situation is used as an example.

Step 1:

Determine which free agents qualify as compensatory since those players with modest salaries will not be included in the formula. The cap number of last year’s highest paid player not to qualify must be multiplied by the rate of inflation (which matches the rate of increase in the salary cap) which is approximately 5.5%.

$715,000 x 5.5% = $754,325

These numbers are somewhat estimated although they still serve to clearly delineate which players qualify:

Additions:

Bennie Anderson $5,100,000/3 years...$1,700,000/year

Kelly Holcomb $6,600,000/4 years...$1,650,000/year

Mike Gandy $2,590,000/2 years...$1,300,000/year

Subtractions:

Jonas Jennings $36,000,000/7 years...$5,140,000/year

Pat Williams $13,000,000/3 years...4,330,000/year

Step 2:

Determine the difference between the salaries of the additions and the subtractions.

Total Salary of Additions = $1,700,000 + $1,650,000 + $1,300,000 = $4,650,000

Total Salary of Subtractions = $5,140,000 + $4,330,000 = $9,470,000

$9,470,000 - $4,650,000 = $4,820,000

Step 3:

Determine with which compensation your number correlates. As in step one, this number can be calculated from last year’s number. This is the lowest number accepted in the range. Below is the number for the fourth round.

$4,400,000 x 5.5% = $4,642,000

If the difference between the salaries lost/gained (from step 2: $4,820,000) is greater than the bottom of the fourth round range (from step 3: $4,642,000), as occurs above, the Bills may qualify for a fourth round compensatory pick. I say ‘may’ because there are minor tweaks worked into the formula accounting for games played and postseason honors.

In this case, while Pat Williams started every game, Jonas Jennings was injured for much of the year. For the Bills, all three free agents accrued significant playing time. It is possible that Buffalo could be bumped back to a fifth round slot depending on the league’s adjustment, but it is my estimate that Buffalo will possess the following selections:

#8

#40

#67

#72

#104

And, without calculating any other team’s compensatory selections, approximately pick #130. Six picks in the first four rounds.