Alvarez's deal has a $2 million base (if he reaches the big leagues) and $3.5 million in incentives, sources told Olney. The deal is pending a physical.
A member of the Orioles last season, Alvarez primarily served as a designated hitter. This year, however, the team is considering Alvarez as an outfielder, and he could open the season at Triple-A Norfolk.
The left-handed power hitter has 153 homers in seven major league seasons, six with the Pittsburgh Pirates and one with the Orioles, and was an All-Star in 2013 when his 36 homers tied for the National League lead. He hit .249 with 22 homers, 49 RBIs and 97 strikeouts last year.
Alvarez, 30, made $5.75 million last season after he signed a one-year contract with the club last March.