DALLAS - The dream of a bullpen with Jonathan Papelbon as the closer and Ryan Madson as his setup man with closer experience officially ended Wednesday night.

Scott Boras, the agent for Madson, said his client declined the offer of salary arbitration that would have allowed the 31-year-old pitcher to remain with the Phillies on a one-year contract.

"Ryan was always going to remain a free agent," Boras said.

Jimmy Rollins and Raul Ibanez also declined arbitration by the midnight deadline. The Phillies will receive a sandwich pick between the first and second rounds as compensation when Ibanez signs elsewhere.

Instead of getting Madson for another year, the Phillies will be compensated with a first-round draft pick should the veteran reliever sign with a team that finished with one of the top 15 records in baseball last season. The Phillies also will receive a compensatory pick between the first and second rounds for Madson.

A few weeks ago, Boras thought he was close to negotiating a four-year, $44 million deal with the Phillies, but that fell apart when the Phillies opted to give the more experienced Papelbon a four-year contract. Boras remained confident that he'll get a good deal for his client.

"Ryan Madson is a closer that is certainly a guy on the market who has performed in a large market and in the playoffs and performed at high levels," Boras said late Wednesday night. "He is one of the few closers of that age who has the combination of a 95-m.p.h. fastball and a change-up. I think we have to wait in time to see how the [closer market] filters out."

The only teams with a need for a closer are Boston and Cincinnati, and possibly the Los Angeles Angels. While Madson is the best available option, it is decidedly a buyer's market. If he would have accepted arbitration, the Phillies could have traded him or retained him on a one-year deal as a setup man in 2012. That way, Madson could have sought a more lucrative deal next winter than the one he'll sign this year.

Contact staff writer Matt Gelb

or @magelb on Twitter.