Orioles decline $11 million option on Mark Reynolds, exercise option on Luis Ayala (UPDATED)

First baseman Mark Reynolds, an integral part of the Orioles' best season in 15 years, said he wasn't surprised that the team declined its $11 million option on him for 2013, but he made it clear that he still wants to remain in Baltimore.

In declining Reynolds' option — a move the team announced Wednesday — the Orioles must pay Reynolds a $500,000 buyout, but he still has one year of arbitration eligibility remaining. So the team can retain Reynolds for next season, provided it tenders him a contract by the Nov. 30 deadline.

"We'll see what happens then," Reynolds said Wednesday. "If they non-tender me and I'm a free agent, it would be irresponsible if I didn't see what else was out there. But at the same time, I love playing in Baltimore. I have a lot of friends on the team. I love playing for [manager] Buck [Showalter] and I love being in the city. Hopefully, I'm in a win-win situation here so that if they do want me back, hopefully we can work something out and I'll be back playing for Buck and the O's."

Reynolds made $7.5 million in 2012 and could make about $9 million through the arbitration process. The Orioles could also non-tender Reynolds, allow him to become a free agent and then negotiate a contract with him on their own, even possibly a multi-year deal with an option. The Orioles appear like they might be content to allow Reynolds to test the free-agent market.

The 29-year-old Reynolds hit 37 homers for the Orioles in 2011 and averaged 35 homers in a four-year span between 2008 and 2011. But this season, his home run (23) and RBI (69) totals were his lowest since his rookie season of 2007. He made up for that with stellar defense at first base once he was permanently moved there in mid-May. After struggling at third base early in the season — he made six errors in 15 games — Reynolds had a .995 fielding percentage in 108 games at first.

"Mark solidified first base for us," Showalter said. "And it was because he worked for it. He sacrificed a lot for the betterment of the team. He told me early on, 'I want to win. I'll do whatever.' Mark was a good teammate. I should say Mark is a good teammate. We're still exploring ways to keep him."

Reynolds has always been a streaky hitter, and he struggled offensively throughout the season until he began heating up in August (15 of his 23 homers came in the final two months of the season). Reynolds also drew a team-high 73 walks, and his .335 on-base percentage was the highest among Orioles with more than 105 games played. His .286 batting average with runners in scoring position was second on the team among regulars. He also struck out 159 times in 2012 after averaging 208 strikeouts the previous four seasons.

And he earned stripes with Showalter for the toughness he displayed throughout the season, playing through nagging injuries and being painfully plunked by pitches several times.

Reynolds has said numerous times that he relished playing here. He said this season was his most enjoyable since his rookie year in Arizona in 2007, when the Diamondbacks went to the National League Championship Series.

But the Orioles simply couldn't see paying Reynolds $11 million next season. He would have been the team's second-highest paid player behind right fielder Nick Markakis ($15 million in 2013). And while he became an asset with his glove, his streakiness and strikeout numbers weren't worth that pricetag, especially in a lineup with its share of feast-or-famine bats — a fact that became glaring during the postseason.

"It really wasn't that big of a surprise," Reynolds said of not having his option picked up. "Baseball is a business, and they had to do what they felt was best to help construct their team."

If the Orioles don't retain Reynolds, Chris Davis and Wilson Betemit both have experience at first base, and Joe Mahoney, who also plays the position, is on the 40-man roster.

Davis began the season as the Orioles' starter at first and is generally thought to be a solid defender there, but he struggled early and spent much of the second half playing in the outfield or serving as DH.

Betemit's defense isn't his strength, and he should ideally only start against right-hander pitching. There is an outside chance that right fielder Nick Markakis could eventually transition to first as well.

The free-agent pool of first baseman isn't strong. The top names — Carlos Lee, Carlos Pena and James Loney — all have weaknesses. The Nationals are still trying to retain Gold Glove first baseman Adam LaRoche, and even if he becomes a free agent this weekend, he might be out of the Orioles' price range.

The Orioles did excercise a $1 million club option for right-handed reliever Luis Ayala. That move was also expected, considering Ayala was an instrumental part of the Orioles' stellar bullpen, pitching in 66 games to a 2.64 ERA.