O'Day will make $31 million over the contract, according to Jon Heyman of CBS Sports.
O'Day was reportedly deciding between the Nationals and Orioles. Reports last night stated that the Nationals were the front runners for O'Day, but Rosenthal reported this morning that they were reluctant to give him a fourth year, which the Orioles ended up giving.
In MLB Trade Rumors' Top-50 free agent rankings, O'Day was the highest ranking reliever, coming in at No. 33. With him signing, the relief market should progress quickly.
O'Day's $7.75 million annual average value is a lot of money for a non-closing relief pitcher, but his signing comes on the heels of an offseason when relief pitching was getting plenty of money.
In the 2014-2015 offseason, David Robertson (four-years, $46 million) and Andrew Miller (four-years, $36 million) set the tone for good relief pitcher money. While those players are both closers, O'Day is one of the best setup men in baseball and wanted a contract in that range.
Last season, O'Day went 6-2 with a 1.52 ERA, 11.3 K/9 ratio, and 1.9 BB/9 ratio in 65 1/3 innings pitched. He was named to the American League All-Star team, the first distinction of his career. Advanced pitching metrics FIP and xFIP pegged him at 2.49 and 3.05, according to FanGraphs.
As for the Orioles, O'Day coming back gives them a potentially strong back-end bullpen in 2016. Along with Mychal Givens and Zach Britton, the Orioles hope the trio will be able to shut down the opponent's lineup at the end of games.