Fair response. I think that a reasonably set cash compensation system would also be beneficial as well. The numbers I threw up originally perhaps are not enough compensation but I think there is a happy medium to be had there. Maybe a hybrid system of cash and picks? Perhaps one first round pick and 5-8 million cash for a top end RFA? A team could still match the offer and the compensation would be moot, but if the team did not match they would get a top pick and a nice sack of cash for their troubles. It would at least maybe help mitigate some costs of lost merchandise or ticket sales from losing the said player and just the general costs of player development the team had put in. It would also be a form of revenue sharing.
I don't disagree with what you have to say, i just have an issue with the amounts proposed. This data is a little hard to find but this link has some basic financial info for the Calgary Flames from the 2003, 04, 06 and 07 seasons:
http://www.privco.com/private-company/calgary-flames
You can see that in 2007 the Flames had Revenues of 77 million, with a payroll of 45 million yet still lost 1 million dollars, in 2003 with revenues of 51 million and a 32 million dollar payroll they lost 6 million dollars. Based on operating revenue for those 4 seasons the Flames actually lost 3 million dollars, hopefully they managed to invest some of their money wisely so that they were able to offset that loss but I don't have that data. My issue with this is that there is nowhere for that 5-8 million dollar compensation payment to come from.
conversely here is the data for the Toronto Maple Leafs, a "big market team":
http://www.privco.com/private-company/toronto-maple-leafs
You can see that over those four seasons the Maple leafs had an operating income of 123 million dollars, and before the 05 lockout (pre salary cap) their payroll was nearly double what the Flames was.
What I am saying is that in simple terms the Maple Leafs as a big market team have 123 million dollars floating around (for the purpose of this argument, i know that this money isn't just "floating around", its in the Ontario teachers pension fund or wherever it goes) to go out and spend 5-8 million dollars in compensation to sign as many RFA's as they want, while the Flames as a small market team with an operating loss could only sign those RFA's by financing through somebody.
I think you have a great idea about how to amend the system, and picks but cash is a great way to do it, but for it to work the cash would have to be in the hundreds of thousands rather than the millions. It seems like you and I want the same thing, a system that is fair to all parties, a system that is fair to the team losing the player and the team gaining one. Unfortunately professional sports is a world of haves and have nots, and it's really tough to structure things in a way that gives a level playing field for all concerned.
My suggestion for compensation for a top RFA would be one first round pick from one of the next 3 seasons, one second round pick from one of the next three seasons, plus $500,000 in cash. This way the small market teams could still compete for RFA's, and an Alberta boy who wants nothing more to play for his hometown team could sign with the Oilers or Flames just as easily as he could sign with the Maple Leafs or Rangers.
After writing this one thing is really clear, the current system needs to be amended.