Found 15 days ago on Replacement Level Yankees:
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Free agents are classified as Type A, Type B or not at all. The compensation applies to free agents offered arbitration by their former club by the Dec. 1 deadline or to those who sign before then. If a team signs a Type A free agent, its first-round pick goes to the former team—unless that pick is in the top 15, in which case a second-round pick goes to the former team. The former team also gets an extra pick between the first and second rounds. If a team loses a Type B fre...

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