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Not sure "buying wins" and developing prospects are mutually exclusive.
Unless the M's sign someone who's going to block a top prospect at the same position (and hitting-wise, the farm is thin anyways), there's no reason why signing a Prince Fielder should in any way interfere with the initiative to grow some talent internally. The Dustin Ackleys of the world will force their way into the lineup regardless of whether you're the 2011 Mariners or the 1998 Mariners. You can't field a team of entirely FA signings.
The M's have been among the 3 worst teams in the majors in 3 of the past 4 seasons. They are definitely in rebuild mode. However, that's not justification to ignore the free agent market. If the M's do not sign Fielder, it's not like that's $20 million more they're going to spend on Amateur signings. They owe it to the fans to field as good of a Major League team as possible during the rebuild. Sure don't see the tickets getting any cheaper...