According to Joe Christensen of the Minneapolis Star-Tribune, the Minnesota Twins are apparently preparing to lose three major pieces of their American League Central championship team of this season, but also stand to reap a windfall of benefits if all three of them should, indeed, be lost.
Pavano could very well be the best non-Cliff Lee starting pitcher available on the market, and his career renaissance with the Twins has been nothing short of remarkable after the train wreck he turned into after signing with the New York Yankees. Crain is thought by many to be the best relief pitcher on the market, and Hudson is one of the better available second basemen.
Where the draft picks come from is a result of what "type" of free agent the players in question are classified as by the Elias Sports Bureau. Pavano is what is known as a "Type A" free agent, which means that Elias has deemed him to be in the top 20% of all players based on his previous two seasons. Crain and Hudson are both classified as "Type B" free agents, which means that Elias has determined them to be in the next 20th percentile down. The 60% of free agents that are not classified as either Type A or Type B are simply "unclassified" free agents.
As Pavano is a Type A free agent that was offered arbitration by the Twins, if he does not sign with Minnesota, the Twins are entitled to a first-round draft choice from the team that does sign him, as well as a supplemental draft choice. If the Twins lose Crain and/or Hudson, they will be entitled to a "sandwich" pick (i.e. a pick that falls between Round One and Round Two of the draft) for each of them.
As a result, if all three of the players that declined arbitration from the Twins sign with other teams, Minnesota could potentially receive four high draft picks in return.
For more on the implications and impact of these decisions, be sure to check out our good friends over at Twinkie Town, where they'll no doubt be breaking this down in greater detail.