A free agent, Gagne is all but certain to seek a closing job elsewhere, as the Red Sox already have one of the best closers in the game in Jonathan Papelbon.
The main motivation behind Boston offering Gagne arbitration is that he is a Type B free agent, meaning the Red Sox will gain a supplemental round Draft pick, assuming another team signs him.
When the Red Sox acquired Gagne in a trade with the Rangers on July 31, they thought he was the final piece that would turn an already strong bullpen into a dominant one.
But Gagne -- a star closer for much of his career -- couldn't adapt to a setup role. He struggled from the outset and became the target of boos at Fenway Park.
Gagne pitched in 20 games for the Red Sox, posting a 6.75 ERA. He was used sparingly -- and typically in mopup situations -- during the postseason, registering a 6.23 ERA in five outings. The Red Sox still went on to win the World Series.
Signed by the Rangers last winter, Gagne recovered from several injury-plagued seasons by going 2-0 with a 2.16 ERA and 16 saves over 34 outings.
He won the National League Cy Young Award in 2003, when he was with the Dodgers.
The Red Sox still retain the right to sign Gagne to a contract, but it is highly doubtful that they will do so.
Ian Browne is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.