Last night, word broke that the Cincinnati Reds and Ryan Madson had come to terms on a one year contract that would pay the right handed reliever $8.5 million to replace Francisco Cordero as the team’s closer.

It’s a fascinating deal for a number of reasons. Primarily, it leaves little doubt in anyone’s mind as to the intentions of the Reds in 2012. As their previous transactions over this winter would indicate, they’re going for it. And in the National League Central, that’s not so difficult of a thing to do.

However, the deal also contrasts rather mightily with the contract that the Philadelphia Phillies gave to Jonathan Papelbon at the beginning of the off season. The former Red Sox closer agreed on a four year contract worth $50 million with the Phillies less than a week after rumours of circulated that Madson was going to sign a similar deal to stay in Philadelphia.

Madson and Papelbon have similar characteristics as shutdown relievers, and yet both received very different terms in their free agent contracts. While the percentage of payroll that the rest of the Phillies’ bullpen eats up likely makes Papelbon’s current contract affordable, it’s not always going to be that way with Antonio Bastardo and David Herndon entering arbitration for the first time ahead of the 2013 season.

Meanwhile, the Reds deal with Madson is so team friendly that it quite likely represents a loss of money from what the former Phillies closer would have received had he accepted arbitration. Sure, $8.5 million is a lot of money for a pitcher who’s unlikely to face more than 300 batters this coming season, but on a playoff competitive team like the Reds, it represents a very good signing, made to look even better by the terms of the Papelbon deal, and even the Toronto Blue Jays deal with Darren Oliver, which is a one year contract that guarantees the lefty specialist only $4 million less.

There have been some reports that an option exists in the contract, which is rather interesting because if we look at the new collective bargaining agreement, we see that with a good year in 2012, Madson might get a what’s essentially a player option via a qualifying offer from the Reds at the end of the season.

Part of what makes Cincinnati’s signing of Madson such a good deal is that they don’t have to give up a draft pick to sign the modified Type A free agent (while the Phillies get one pick in front of the Reds in the second round, as well as one in the supplemental round). While Madson will likely be looking for a multi-year deal next off season, teams could very easily be scared off having to give up a pick to sign him, and once again, he may be forced to take another one year deal from Cincinnati, this one somewhere in the neighbourhood of $12 million.

Under these circumstances, the Reds may have made an even better signing here, as the deal could easily end up being an array of successive one year deals that gives the team the opportunity to keep Madson under control for a small premium, but without the risk of a long term deal.

And anytime Cincinnati does something, this should be mandatory: