The Giants have reached a two-year, $23 million contract with ace Tim Lincecum, which allows the two sides to avoid an arbitration hearing that was scheduled for today.

According to ESPN.com, Lincecum will receive $8 million this year and $13 million in 2011, as well as a $2 million signing bonus. He also has a chance to earn performance and award bonuses, although no details have been provided on what those incentives are.

This is great news for both sides, as arbitration hearings can sometimes get messy between team and player. Lincecum had filed for $13 million in arbitration, which would have broke Ryan Howard’s mark of $10 million in 2008. The Giants submitted $8 million for Lincecum, which was viewed by many to be a lowball offer for a two-time All-Star and Cy Young winner. Lincecum also owns a 40-17 record and a 2.90 ERA with 676 strikeouts in only three seasons.

After overpaying for Barry Zito, Aaron Rowand and Edgar Renteria (just to name a few) offer the last couple of seasons, the Giants made the right decision coming to an agreement with Lincecum before the hearing. Along with Pablo Sandoval, Lincecum is the face of the franchise and the ace of a fantastic pitching rotation that also features emerging star Matt Cain, top prospect Madison Bumgarner and 27-year-old Jonathan Sanchez, who threw a no-hitter in 2009.

Now that they have come to terms with Lincecum, the Giants can focus on what hopes to be a successful 2010 campaign. They have enough pitching to challenge for a postseason berth, but their offense has been among the league’s worst for several years now. The club hopes that the moves they made this offseason (i.e. signing free agents Mark DeRosa and Aubrey Huff, as well as re-signing Freddy Sanchez and Juan Uribe) will be enough to get the Giants back into the postseason.

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In a surprising twist of events, a source tells John Shea of the San Francisco Chronicle that the Giants have offered ace Tim Lincecum a three-year, $37 million contract. The deal would pay the pitcher $9.5 million, $12.5 million and $15 million over the next three years, although Shea reports that Lincecum’s camp countered with a proposal for over $40 million.

If not, Friday’s hearing in Florida would decide whether Lincecum’s 2010 salary is $13 million (the figure he submitted) or $8 million (the figure submitted by the Giants).

The record for a player eligible for arbitration for the first time is $10 million (Phillies first baseman Ryan Howard), $4.35 million for a starting pitcher (Dontrelle Willis, Cole Hamels). It’s believed Lincecum’s agent, Rich Thurman, negotiating for a multiyear deal, has asked for a first-year salary close to the $13 million figure he submitted.

It was just yesterday that I hammered the Giants for creating a lose-lose situation by only offering Lincecum $8 million in arbitration and then following through with the hearing by setting it up for this Friday. I maintained they were running a risk of not only losing in arbitration, but also upsetting Lincecum (their franchise player) in the process by low-balling him with their $8 million offer.

But this changes everything. Now the Giants are showing their commitment to Lincecum by offering a fair deal that works for both sides. And if they’re only a few million apart, then hopefully they get something worked out by tomorrow and avoid a potentially messy arbitration hearing.

The Giants went from a lose-lose situation into a potentially positive one, although let’s see if they can close the deal before tomorrow.

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Far be it for me to question what the inner workings of a professional baseball organization is doing, but what in God’s name are the San Francisco Giants thinking?

In mid-January, Tim Lincecum field for $13 million in arbitration, while the Giants submitted an $8 million figure. Many viewed the situation as the Giants low-balling their ace pitcher, but I figured that the $8 million would be used as a starting point for the club and Lincecum to reach a deal outside of the courtroom. I even told my cohort here at The Scores Report, John Paulsen, that they would likely avoid arbitration altogether and meet somewhere in the middle.

But upon waking this morning I read: Giants, Lincecum set arbitration hearing for Friday.

Nice prediction, Stalter.

Unless I’m missing the big picture here, the Giants have done a fantastic job of setting themselves up in a lose-lose situation. By submitting $8 million and then actually following through with the hearing, they risk not only pissing off Lincecum but also losing $13 million in arbitration. After all, what are they going to use against Lincecum – his RBI totals?

Fortunately for the Giants, Lincecum is being a total professional about the situation. He’s on record saying that he understands the business part of baseball and that it’s nothing personal. He also understands that the Giants could use his October 30 pot charge against him during the hearing, although that’s about the only thing the club has against the two-time Cy Young winner.

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The Giants are likely headed toward an arbitration hearing with their ace Tim Lincecum, as the sides remain far apart on the pitcher’s 2010 salary.

From the San Jose Mercury News:

The Giants and Lincecum exchanged salary offers two weeks ago; the Giants filed at $8 million, the highest number offered by a club to a player with less than three years of service time. Lincecum’s camp filed at $13 million, a record-setting number that many in the industry still considered low.

Industry sources said that it made sense for Thurman to file a “winnable” number if he expected the case to reach a hearing. Once at that stage, an arbiter considers the evidence, hears arguments and chooses one salary or another — with no middle ground.

I’d be shocked if an arbiter sided with the Giants at $8 million. Lincecum already has two Cy Young awards, is a two-time All-Star and the Giants finished with a winning record last season, which are all things an arbiter looks at.

The Giants have an interesting situation on their hands in regards to Lincecum’s long-term future. He has four more years of arbitration and if they wanted to, the club could go year to year and continue to pay him in the $13-20 million range (assuming his arbitration number continues to rise). Assuming he doesn’t get hurt and leaves via free agency at the end of those four years, then the Giants would have had him for four years at around $80 million.

Now, if they wanted to buy out his remaining arbitration years with a long-term contract, then the Giants will guarantee Lincecum upwards of $100 million. If he gets hurt, then they’re screwed but at least he’s locked in and they don’t have to worry about going year to year with arbitration and getting embarrassed with offers like $8 million for one of baseball’s best pitchers.

With the way he’s looked the past two seasons, I would hurry to lock Lincecum up to a four or five year deal if I were the Giants. But he’s only 25 and no matter great he’s pitched over the last two years, there’s no guarantee for future success. If his arm fails off in a year, the Giants would have made the right decision to take things year by year.

Either way, “The Franchise” is under the Giants’ control for the next four years.

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