The San Francisco Giants and pitcher Tim Lincecum have agreed to terms on a two-year extension that will keep the two-time National League Cy Young winner on the team through 2015, paying him a total of $35 million.
Lincecum was arguably the best pitcher in baseball for 2008-09, winning the NL Cy Young Award both years. He wasn't quite as good in 2010 and 2011, but was still the kind of arm you gladly pay $17.5 million. In 2012 though, the wheels fell of the wagon, and Lincecum posted a 5.27 ERA, despite pitching in one of the best pitchers' parks in baseball. His ERA+ (which adjusts for things such as park factors) was 68, the lowest by any starting pitcher since 2005. In 2013 he 'rebounded' to an ERA+ of 76, fifth-worst in baseball.
Lincecum is still only 29 though, and his peripherals have been pretty solid over these last couple years. His strikeout rate has remained strong (though his velocity is down), and his FIP this season was 3.74, right around the average among qualified starting pitchers. If you think that's more in line with who he'll be going forward, you could justify paying him as a league-average starting pitcher, the going rate for which is probably something like $12 million a year. That's seeing him in his best light though, and it still doesn't get you to the $35 million San Francisco will be paying him over the next two years.
What does this mean for the Indians? It's hard to say. Frankly, if Lincecum had hit the market, I don't think any other team in baseball would have given him that kind of money (the Giants are loyal to their players, I suppose). For that reason, I don't think Lincecum's new contract does a whole lot to 'set the market' for other potential free agent pitchers. I suspect when this offseason's round free of agency comes to an end, this contract will look like an outlier, an overpay. Fewer available targets tends to raise the price on those who remain though, and Lincecum's deal will be pointed to by players' agents all offseason, and I assure you Ubaldo Jimenez and Scott Kazmir were both to hear this news.
Jimenez certainly merits a qualifying offer, as there's a solid case that he's going to be the best pitcher among free agenst, after all. Unless he's specifically looking for a one-year deal in order to further rebuild his value though (if Jimenez were to have a full season like his 2013 second half and then hit free agency, he'd likely get something like 4 years/$80 million next winter), Ubaldo is going to decline the qualifying offer. Whether the Indians can entice him to stay in Cleveland with a multiyear deal remains to be seen. If Lincecum's contract does turn out to establish the going rate this offseason, watch out, because things are going to get wild, and the Indians are going to be priced out of the market.