Ricciardi said that Toronto offered arbitration to Lilly on Friday, which was the deadline for clubs to do so with their six-year free agents. Players in that situation have until Dec. 7 to accept or decline.
O'Brien said that Lilly would likely be declining arbitration, but the Jays still can negotiate a new contract with the pitcher. By offering arbitration, Toronto secures a compensation draft pick if Lilly -- a Type B free agent -- decides to sign with another team.
"Once again, it's just going to come down to, 'Does Ted want to stay here?' We'll see," Ricciardi said. "He knows what he's got here. The Cubs' situation is different than our situation. We'll see how it plays out."
O'Brien said that he didn't anticipate Lilly signing a new contract with any team before the Winter Meetings begin on Monday. The Yankees, Orioles, Rangers and Giants have also expressed an interest in the 30-year-old pitcher, and O'Brien planned on meeting with those clubs next week, too.
"The Cubs are obviously up there," O'Brien said. "They've been very diligent -- as far as pursuing Ted. I think they'd really like to have us come there, and they're definitely one of the teams that we're considering."
O'Brien has likened Lilly's situation to that of Jarrod Washburn, who signed a four-year deal worth $37.5 million with Seattle last winter. While he wouldn't give a specific figure, O'Brien indicated that the Cubs' offer was in that price range.
"I've always pointed to that contract as something that I thought would be something that we should be able to achieve," O'Brien said. "With what Chicago has offered us, and some other conversations that we're having with a few other clubs, I think that number is definitely achievable. Who knows, it might get richer than that."
That type of contract was originally thought to be too steep for Toronto, but Ricciardi has insisted that he's very interested in re-signing Lilly, who won a career-high 15 games with the Jays in 2006. Ricciardi is also pursuing free-agent starter Gil Meche and would like to add both pitchers to Toronto's rotation.
"I talk to J.P. almost every day. He has always indicated that he wants Ted back, and he'll do whatever he needs to do within reason," O'Brien said. "I think he's got some additional funds that maybe he didn't think he had four to six weeks ago. He's told me that they're going to aggressively pursue Ted and Gil Meche."
O'Brien also wasn't sure if the Yankees would be as aggressive in their pursuit of Lilly now that they won the negotiating rights to Japanese left-hander Kei Igawa.
"I just don't know," O'Brien said. "With what the Yankees have done -- now they've got the rights to that left-handed Japanese kid -- they might not be in the mix anymore."