AdamOnFirst had this earlier today, so be sure to check there for additional discussion.

First, what we know:  the Minnesota Twins have signed Nick Blackburn to a four-year, $14 million dollar contract.  The deal buys out this season (Blackburn's final season as a serf) and all three of his arbitration years.  There's also an $8 million option for 2014, which would be Blackburn's first year of free agency.

Oddly enough, a year ago tomorrow the Twins did the exact same thing for Scott Baker.  In terms of dollars the deals are quite similar (Baker's was four years, $15.25 million with an option in 2013 for $9.25 million).

Over his first two full years in the majors, Blackburn has been a remarkably consistent pitcher.  His ability to control his pitches and stay in command of his situation, in conjunction with his ability to consistently chew up innings, are where a majority of his value comes from.  It's easy to undervalue skills like endurance and strike zone control, because anytime you rely on players hitting the ball to be a big part of your success as a pitcher you're playing with fire.  But Blackburn has proven to this point that he can succeed on that margin.

In 2008, Nick was a 2.5-win player; last year he was a 3-win player.  Barring injury, his value above replacement should continue to be in that range over coming seasons.  Understanding that the value of a win above replacement being about $3.5 million, let's outline some parameters for expectations.

* = Option Year

In arbitration, the standard scale of compensation versus full value (or market value for a free agent) is 40-60-80, so that's where those numbers come from.  They're just a guide.  Therefore, if Blackburn is a 2.5-win player in 2011, 40% of his value would be $3.5 million.  That's how you read the chart.

As of this writing we don't have numbers on Blackburn's new contract for his three arbitration-eligible seasons, but at a glance it looks like it's a pretty fair deal by baseball's financial climate today.  Obviously the more wins he's worth over replacement, the bigger bargain this deal becomes.

Obviously the Twins didn't need to do this.  Not just because Blackburn is under team control for the next four seasons, but because Minnesota was already thrust tightly up against their payroll threshhold for this coming year.  The second half of that sentence is what seperates the Blackburn deal from the Baker deal a year ago.  So why did the Twins make this decision?

Cost certainty.  Because of Joe Mauer.

Twins Assistant General Manager Rob Antony said it himself in our Q&A two weeks ago:

J:  Not wanting to go with more than a one-year deal [with any of the incoming free agents], did that have a direct correlation with the change in the revenue sharing stream that comes in now that you have your own stadium?

RA:  No, I think it has more to do with not knowing how much our All-Star catcher's going to cost in the future.

J:  (laughs)

RA:  (laughs)  So it's hard to commit substantial dollars to other players, aside from what we've already committed to the Morneaus and the Cuddyers and the Nathans, and players down the road.  We're just trying to maintain as much flexibility as we can so we don't cut ourselves short on that one.

Also, this in response to a question on the organization's philosophy on spending:

Now the projected revenues are obviously going up in Target Field, and so we basically looked at it and said you know what--we've got about $90 to $93 [million] to work with, and we were at that.  When Orlando Hudson became available our owner basically said "Don't worry about the payroll, if you think we can get this guy and you think he would be a great addition, let's go".

This means two things.  First, it means that the Twins were already at or above what they wanted to spend before they brought in Orlando Hudson.  So why throw on another few hundred thousand dollars when you just as easily could have waited until after the season to cut this deal?  Because of number two, which is that the Twins wanted some payroll flexibility.

In this situation, payroll flexibility and cost certainty are the same thing.  With the organization trying to hammer down exactly "how much our All-Star catcher's going to cost in the future", the best way to maintain some level of flexibility is to understand exactly how much you're spending on payroll in coming years.  Down to the dollar.  Instead of waiting it out with Blackburn in arbitration next season, the front office is getting a better idea of future finances.

Extending Joe Mauer is a big deal.  Even for the Twins, whose revenue will suddenly become top ten in baseball, having a player make more than $20 million (for the first time in franchise history) is a hugely, massively big deal.  The more accurately future blueprints are laid out, the better position this team will be in to adapt in coming seasons.

Blackburn deserves this extension, and although long-term contracts for pitchers are always risky, as long as he's healthy this is a good deal.  I just think there's more to it than meets the eye.