Ken Griffey Sr., who made major league baseball history by playing on the same team with his son last season, signed a one-year contract to return to the Seattle Mariners. Griffey, 40, will receive about $700,000 base salary plus games-played incentives that could boost earnings to nearly $1 million, the Seattle Post-Intelligencer reported.

The newspaper said Ken Griffey Jr. likely will have his 1990 salary of $210,000 doubled. Those negotiations have not started. . . .

The Chicago Cubs beefed up their bullpen by signing free agent reliever Dave Smith to a two-year contract with a third-year option. Other terms were not disclosed.

Smith, 35, has spent his 11-season major league career with the Houston Astros. The right-hander is 53-47 with 199 saves and a 2.53 ERA in 563 games. He was 6-6 last season with 23 saves and a 2.39 ERA in 49 games.

Also, the Cubs came to terms with left-handed reliever Paul Assenmacher; terms were not disclosed. Assenmacher, 30, was 7-2 last season with a 2.81 ERA and 10 saves in 74 appearances. . . .

Bob Welch's new contract with the Oakland A's is worth $13.8 million over four years, sources familiar with the deal said. They say he'll get a $2.2 million signing bonus and yearly salaries of $2.9 million. The average annual value of $3.45 million is the ninth-best in baseball and trails only teammate Dave Stewart ($3.5 million) among pitchers. . . .

The Philadelphia Phillies signed free-agent right-hander Danny Cox, 31, to a Class AAA contract with Scranton/Wilkes-Barre, their International League affiliate. He will be invited to major league spring training as a non-roster player. Cox, who has had surgery on his right elbow twice since May 1988, is 56-56 with a 3.40 ERA in seven-plus major league seasons, but has not pitched in the majors since Aug. 6, 1988.. . .

Pete Rose, baseball's all-time hits leader, will move to South Florida once he completes his sentence for tax evasion, his manager and close friends say.

Rose, 49, is scheduled to be released Jan. 7 after serving a five-month sentence at federal prison in Marion, Ill., for failing to report income on his tax returns. He also must spend three months in a halfway house and perform 1,000 hours of community service. . . .

Former Federal Reserve Board chairman Paul Volcker was named to the Economic Study Committee that will examine baseball's finances.

Volcker and Rockefeller Foundation Chairman Peter Goldmark were picked by management. David Feller, a law professor at the University of California-Berkeley, and Henry Aaron, director of economic studies at the Brookings Institution, were chosen by the Major League Baseball Players Association. (Aaron is not related to Hank Aaron.) Milwaukee owner Bud Selig, the chairman of management's Player Relations Committee, and union head Donald Fehr will be co-chairmen of the commission, which is to report by Sept. 1, 1991.