The O's went after Jason Bartlett and then ended up trading for JJ Hardy (in a much better deal). They were looking at Kevin Gregg and then signed Jeremy Accardo (to a much cheaper deal - though they sadly still might have interest in Gregg). They may have offered Adam LaRoche a three-year contract and were looking at him as their first choice to play first-base in 2011. Luckily they had to go to plan B again, as LaRoche was holding out for something better. The Orioles finally wised up and moved on to Derrek Lee, who they signed to a one-year, $8 M contract (probably - the exact terms haven't been released yet, but that's the figure that was going around*).
* Apparenlty Lee turned down $8.5 M from the Padres to come to Baltimore. Huge diffference in park factors there, but still.
Lee had a down season last year, hitting .260/.347/.428 and accumulating just 2.0 fWAR. His strike-out rate of 24.5% was the highest it had been in eight years (though there wasn't a big drop in his contact rate), and his .168 ISO the lowest it had been in eleven. Still, he walked at an above average clip (11.7%) which kept his bat above average. Lee's also just one year removed from a .306/.393/.579 season (5.2 fWAR), and though he's not likely to reach those heights again, there is some upside potential there.
If Lee hits, say, .275/.355/.450 next year, that would make him +10 runs offensively over 600 plate appearances. The weighted average of his last three seasons is .288/.368/.493, which would be more like +20 runs. I'd say that's the ceiling of what one could reasonably expect, though perhaps with a few extra points of OBP at the expense of some SLG. In any case, it'll be nice to have another player on the team with some real plate discipline - Lee consistently swings at fewer pitches out of the strike-zone than average (according to FanGraphs) and has walked at least 70 times in four straight seasons (Nick Markakis was the only Oriole to walk 70 times last year, and he had only 73 free passes).
Defensively, the fielding stats have Lee between average and pretty good. Career UZR/150 is +1; DRS/150 is +1; Total Zone is 0; and the Fan Scouting Report (just for the past two seasons) is +5 per 150 games. I'd take an even zero for 2011 as a fair expectation; he'll be older, but his recent years are also the ones with the better numbers.
Putting that together, Lee would be about a 2 wins player next year. At $5 M per win, that would make the deal favorable for the Orioles by around $2 M. If his bat bounces back a little more and his fielding is a little better, than a 3-3.5 win season would make the signing look really good. Plus, if Lee is actually playing that well then there might be some demand for him at the trade deadline.
I think this was a good, low-downside (the team should get a minimum of 1 win if Lee is reasonably healthy*), decent-upside signing. The Orioles' infield is set with guys who should each be around average to somewhat above, which hasn't happened in quite a while. The team isn't locked into mediocrity for multiple years, and they buy themselves another year to find a longer-term answer at first. Andy MacPhail once again backed into the move he should have made to begin with.
* He's recovering from thumb surgery, though I think he'll be mostly OK. The injury might partially explains the down season in 2010 though.
Stats: BB% & K%, ISO, wRAA, Plate Discipline Stats, UZR, DRS, Total Zone, Fan Scouting Report, WAR