Carl Pavano isn't the best pitcher in the Twins rotation - that honor goes to Francisco Liriano - but he has quietly been one of the best pitchers in the American League this year. Pavano ranks second in the AL in walk rate (1.5 BB/9), third in innings pitched and 14th in ERA (3.52).
He currently projects as a Type A free agent, and it wouldn't be a surprise to see the Twins offer arbitration, like they did last year. If Pavano accepts, he will return on a one-year deal, presumably for more than the $7MM he makes in 2010. If he declines, the Twins obtain two top picks and the 34-year-old has to fend for himself.
Pavano could try to land a two-year deal on the open market, but teams must be wary of making a multi-year commitment to Pavano given his failed four-year $39.95MM deal with the Yankees. As a result, teams are likely to turn to Ted Lilly or Hiroki Kuroda if they're going to offer more than one year to a mid-thirties starter.
It's possible that some team likes Pavano enough to guarantee him a two-year deal, but his age and injury history suggest he's looking at another one-year contract. As a result, we could very well see a repeat of last offseason when the Twins offered arbitration and Pavano accepted.