Under Baker this season, Cincinnati finished with the second-best record in baseball at 97-65 and won the National League Central division.
But the postseason came to a heartbreaking conclusion. Against the Giants in the NL Division Series, the Reds took the first two games in San Francisco before dropping the final three at Great American Ball Park last week to be eliminated from the playoffs.
Reds general manager Walt Jocketty and Baker were already talking about an extension before the playoff exit. Jocketty said the team's final outcome never played a part in talks.
"That's why it didn't take long," Jocketty said. "We actually had one quick meeting on Friday and we discussed some things over the weekend and wrapped up this morning."
"This is Dusty's team," Reds CEO Bob Castellini said. "These fellas here are poised to go deeper and deeper in the season. To not bring Dusty back was out of the question."
Baker cited his family's support in favor of his remaining in Cincinnati. His 13-year-old son, Darren, let him know he hoped to one day play beside right fielder Jay Bruce on the Reds.
"My family is extremely happy, especially my son, because he is the biggest Reds fan that we have," Baker said.
This season, the 63-year-old Baker joined Bill McKechnie and Sparky Anderson as the only Reds managers to lead the franchise to multiple postseason berths. Since coming to the Reds on a three-year contract in 2008, Baker has a record of 419-391 (.517) and two division titles in the last three seasons. He was re-signed for two years in 2010 after winning the NL Central, but before the Reds were swept by the Phillies in the NLDS.
Baker's 1,581 wins over 19 seasons with the Giants, Cubs and Reds have him ranked 19th all-time and second among active skippers.
The 2012 season was one in which the Reds overcame the loss of three relievers to injury during Spring Training, including new closer Ryan Madson. When their best player, Joey Votto, went down with a knee injury in July, the team responded by playing its most inspired baseball, amassing a 32-16 record while expanding a one-game division lead over the Cardinals to eight.
At one point in the middle of summer, the Reds won 22 of 25 games to take control of first place.
The rotation had four starters pitch 200 innings and no one in the starting five missed a start during the regular season because of injury. But in the NLDS, the Reds were crippled by the loss of ace Johnny Cueto eight pitches into Game 1. While they won that game, it proved a key factor in losing the series.
Before everyone dispersed for the winter, Baker hugged several players and told them he was optimistic he would return. One of them, right fielder Jay Bruce, was pleased about the extension.
"That's great news," Bruce said in a text message. "I believe Dusty has been an integral part of the organization's turnaround. I'm very happy that he'll be back as manager. He's been the only manager I've known since I've been in the Major Leagues, and he's been great to play for. Looking forward to two more years of that."
Baker said he and the club are going into next season with bigger expectations.
"We were all very saddened, from the players to myself, we wanted to go further," Baker said. "We're poised to go further in the future. We're very excited about the prospects of what we have here to carry on what we've started."
Baker missed 11 games in September after being diagnosed with an irregular heartbeat. During his time in the hospital, he suffered a minor stroke, but was back for the final three games of the regular season.
"I can't wait for Spring Training. I feel excellent," Baker said. "I feel that I have most of my strength back. I am working on it right now to come back next year in better shape and keep this weight off. I also want to have my mind clear and better than ever before."
According to Baker, the Reds came into negotiations with a two-year offer.
"I was kind of planning on a one-year contract," Baker said. "I just thought about it and that would create as much [distraction] this year as it has the past year when you're on the last year again."
The Reds will also retain Baker's entire coaching staff: pitching coach Bryan Price, hitting coach Brook Jacoby, bench coach Chris Speier, first-base coach Billy Hatcher, third-base coach Mark Berry, bullpen coach Juan Lopez and assistant pitching coach Mack Jenkins.
A deal has not been reached, but Jocketty expected the staff to get two-year contracts. The medical staff will also be returning.
"I think it's important to understand that we're moving in the right direction," Jocketty said. "We're trying to build a team that will be in contention for a long time and win multiple world championships. One of the things we feel is very important is continuity. Every place I've been, we've always had continuity, whether it's scouts or front office staff or Minor League people, but most importantly, the guys leading the team on the field. If you look, the more successful operations and teams are organizations that keep continuity in their leadership.
"We've made tremendous progress in the last five years, even from 2010. We had the second best record in baseball. We came up short in the playoffs but did some remarkable things. It's something to keep building on."