I take it from reading this thread that a lot of people posting aren't familliar with the accounting/CBA end of this. I am and I don't say that as a negative to anyone; just that I can clear up some of the gray areas if anyone is interested.
This is a real loss for AJ. In opinion, I think he let his reputation/attitude cloud the bigger picture. This is a rare (unique) case. Usually, AJ (and any other GM) has the player over a barrel because in a capped year, the player holding out NEEDS the additional year of accrued service and will ultimiately cave. As pointed out by some astute observers here, this is not VJAX's case. In a normal capped year, he would have simply been an UFA and resigned under the tag, renegotiated a new deal with the Chargers or went somewhere else. But, in this particular case, he actually has one more year than necessary to be a FA under the CBA. So, he didn't need the year and the chances that any new CBA would extend from 4 to 6 years (the magic number that would actually affect VJAX) are extremely, extremely remote. So, he holds out and wants more money, more guaranteed, better financial security. Why risk injury like Javon Walker did when you don't need to just to earn what is measly in comparison the moment he signs a new deal?
Compensatory picks: Comp picks DO have a formula that determine what you receive. It is based on Salary, playing time, and honors received with the NEW team. In theory, he could wrangle his contract to receive more guaranteed money and lower base salary and it could hurt the Chargers but the reason you don't see this employed by design is because it is a contradiction of the new contract he signs. When he signs a new long-term deal with his new team, it will almost certainly have incentive clauses that reward him additional salary if he plays a certain amount of time, reaches certain performance marks, goes to the pro-bowl, etc. Because of this, his playing better also HELPS the Chargers raise their comp pick. Playing worse on purpose takes money out of his pocket so a player isn't going to get caught up in all that once he has his new deal.
As already mentioned, the highest comp pick can only be at the end of the third round. So, the Chargers appeared to forfeit getting more now than what they would even get in their best case scenario a year from now. The really interesting thing about comp picks iscomp picks can not be traded. So, in this case, not only do they maybe take less, but they also forfeit themselves the flexibility of taking a pick that they can not package for something else later.
The BIG consideration in this though is that compensatory picks is that they are never guaranteed when you lose a FA. They are awarded to teams that have lost more qualifying free agents than they gained the previous year in free agency. So, while people generally think its a give, its not. It jsut happens that usually teams that lose FA are normally good teams getting picked over or are letting a guy walk to get another guy, etc. If this situation tarnishes people's opinions of the Chargers enough or they sign more guys than they lose next year, or if anything happens to where they lose less than they get, they won't even get a compensatory pick.
Of course, AJ Smith will know what the deal is going to be before this bears fruit. So, he could just tag VJAX to protect himself. But, if he does this, that really begs the biggest quesiton of all: if you are ultimately willing to pay him the average of the top 5 salaries at the position ($10M+) for one year, why don't you just negotiate a deal that helps you better now and have him now and try to win a Super Bowl? Because if you try to just tag him over and over, you're going to pay him top salary anyway now and if you try to do it again next year, you will make him the highest paid WR in the game (based on the the "20% increase rule).
There's really no other way to see this as anything other than a win (at some point) for VJAX if he just sits tight. One way or the other, he will eventually sign a contract that has immediate guaranteed money and a long-term financial stability in amounts that dwarf what he was making. he will do this without risking injury and that's all he really wanted to start with.
If you take the stance of "AJ and the Chargers sent a message", then you have to realize "at what cost?". Because now you have sent a clear message and established a well known perception that, if you are a FA or kid being drafted to the Chargers, you better MAKE SURE you negotiate a contract that has as little years and as much guaranteed money in it as you possibly can. Otherwise, you are at their mercy. That colelctive attitude by just a few players who will demand big contracts will cripple the Chargers in time when a salary cap is restored because the team will not be able to book all the money in the same years. The biggest friend of a team when dealing with the salary cap is the ability to spread out the paragraph 5 money over the course of contracts.