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The question you need to ask is how will Masterson be in the next 3 years. Cliff Lee's won his Cy Young at age 28. Sabathia won his Cy Young in his 7th season. Both were pretty mediocre (Lee worse than mediocre) the year before they won their Cy Young. Being his 7th season at age 28, there could be a good chance that Masterson takes the next step this year. He has the tools to be a #1 pitcher, just has not put it all together. If he does prove to be a #1, then it will be too late and we will be lamenting that we could have had him for "only" $17 million. If it was a 6 year deal, OK, I see the risk. But a 3 year deal at what he could become is worth the risk.
Difference is, Justin Masterson hasn't even been able to put 2 solid seasons together in a row.
C.C won his CY in 2007. In 2006, he put up these #'s:
12-11, 3.22 ERA, 6 CG, 2 SHO, 1.17 WHIP, 192+ IP in 28 GS. You're calling that mediocre??
He had 6 full seasons prior to that:
-He had never had a ERA above 4.40
-Never had a season where he started less than 28 games
-Never threw less than 180 IP (After his rookie season, never less than 188)
-Improved his SO/BB ratio in 3 straight seasons.
He had a much better track record than Masterson did