The Orioles offered Victor Martinez a lot of money to be their first-baseman for the next four years. He turned them down. They also offered Adam Dunn a lot of money (though less*) to be their first-baseman for the next four years. He also turned them down. Now they're apparently going after Adam LaRoche, and may have even offered him the three year deal he's seeking. That, I think, wouldn't be a particularly smart thing to do.
* This seemed crazy to me. So much of V-Mart's value comes from him being a great hitter for a catcher. The important part there is "for a catcher". As a first-baseman, Martinez isn't all that special of a hitter. I don't see how it makes sense to want to give him $14 M a year and Dunn only $10 M a year. Sure, Martinez might get in a few games behind the plate while Dunn will spend a few more at DH. That's a difference of maybe 5 runs a season. And sure, Martinez might be the better defensive player at first; 5 more runs. Offensively though, there's a big gap going the other way. Dunn is a .384 wOBA career hitter - good for about 27 runs above average per 600 plate appearances. Martinez is a .360 wOBA career hitter - about +17 runs per 600 PA. That almost exactly balances out the defensive differences. Dunn may not age as well, but he's also starting out a year younger (and doesn't have years of wear-and-tear from catching). Offering Martinez more - $16 M more - looks pretty foolish given that they're similarly valuable at best, with Dunn coming out on top in my book (and apparently the AL Central GMs' book, since he ended up getting $56 M from Chicago while Martinez only got $50 M from Detroit).
Adam LaRoche is a perfectly serviceable player. He doesn't have the best contact skills, but they're not terrible; he'll take an occasional walk and hit some balls out of the park; his glove-work is decent. His last five fWAR figures: 2.1, 2.6, 1.7, 2.5, 2.6. He's a fine first-baseman, and a one-year $10 M seems like it would be more than fair (the Diamondbacks turned down his $7.5 M option). It's what Carlos Pena took from the Cubs, and he has out-WAR'ed LaRoche in three of the last four seasons (including Pena's 46 HR, 6.2 fWAR 2007). But three years? He's already 31 years old and so some aging is to be expected. Projecting him for 2 wins next year seems reasonable enough (assume his low walk rate and high strike-out rate from 2010 both move towards his career numbers and cancel out some regression otherwise), and the standard 0.5 wins of aging would put him at 1.5 in 2012 and 1.0 in 2013*. My hunch is that LaRoche wants to be paid as if his skill won't deteriorate at all though, and that just isn't a good bet - especially since the O's wouldn't be getting a premium in the first year(s) of the deal as is more common in long-term contracts (so that the cash-flows and yearly production don't match up, but the overall payout and production does). And it's not as if LaRoche is the kind of difference-maker that might be worth overpaying for. Even two years seems bad. Why would you want to lock yourself into that? Paraphrasing what The Oriole Way said; if the O's want LaRoche on their team in 2012 then they can just sign him next off-season.
* In this case, ~$24 M for the three years would be "fair", but I'm not sure why people really want to pay a below average first-baseman $7-8 M in 2013 just to maybe take the 2011 club from 75 wins to 77.
Another option is Derrek Lee, who even in a down year was about as good as LaRoche (2.0 fWAR). That came on the heels of a great season (5.2 fWAR) and two good ones (3.2, 3.9). Lee doesn't have LaRoche's power, but he's got better plate discipline and is better defensively, I think. At worst, I think he'd match the production of the guy four years his junior. It sounds like Lee is only looking for a one year contract at $8-10 M and his list of possible landing spots is getting shorter. My preference would be to let the Nationals have LaRoche and try to get Lee in for $6-7 M once Baltimore is the only place left for him to get a starting job (though he doesn't especially want to come here, is my understanding). That kind of deal would actually have some upside potential.
Alternately, the team could stay in-house for their first-baseman. Luke Scott played at the position a bit last year, and while he's no Albert Pujols, I don't think he'd kill the team with his glove. Scott had a great season with the bat last year (.284/.368/.535), and though I'd expect that to regress some next year he should still be an above average hitter. A +15 run hitter (a bit better than he was in 2009) with a -5 glove at first-base (which is about the equivalent - defense plus position adjustment - of a DH) would - scaled down to 525 PA - be about a 1.5 win player (a bit better than he was in 2009). If you want to give him an extra boost offensively, fine. Still, I wouldn't go above 2 wins - conveniently, about the same as LaRoche. If Luke fields better, then that makes getting a DH more attractive. If he fields worse, then leaving him their and looking at a first-baseman makes more sense. I think it would be close enough to wash either way.
If the O's need to pick up a new designated hitter, there are a couple options out there. Vlad Guerrero is fun and awesome and whatnot, but he's not the greatest hitter anymore. He had a nice bounce-back season with Texas last year, but his 124 wRC+ is exactly the same as Luke Scott's career mark. I don't love his chances of repeating it again, either, though I don't know that he'll fall off all that far. The Rangers sound like they want to bring Vlad back, but they declined his $9 M option which should tell you something. Maybe call him a 2 win player? I'd go lower, but it's not crazy (especially if he stays healthy enough for 640 PA again).
Jim Thome is also available. The 40 year-old showed he could still hit with the Twins last year (.283/.412/.627), but that was in only 340 plate appearances. Obviously Thome was prodigious power and will walk a ton, and I'd be fine using something a little worse than his 2009 line (.249/.366/.481 and a .367 wOBA that was the worst in his career in a year with at least 250 PA) for 2011 - which would still put him to about 2 wins in ~600 PA.
So, coincidentally, a lot of the Orioles' options are largely interchangeable as far as production is concerned (assuming equivalent playing time). Bringing in any one of the four players - LaRoche, Lee, Guerrero, or Thome - probably won't make more than 0.5-1 win of difference to the 2011 team, if that. That means the O's can just put an offer on the table and let whoever accepts first have a job. My preferences would probably run Lee>LaRoche>Thome>Guerrero if the money were equal, but the gaps are not significant (and the order could change from day to day). If the differences in price are more than a few million bucks though, I'd definitely move on from the more expensive player (currently LaRoche, by what seems like a mile). If Thome would sign for close to the $1.5 M he took last year, that would be my number one option (though it would make the middle of the order pretty left-handed).