Source: Derek Jeter, Yanks agree - By Wallace Matthews and Andrew Marchand

Source: Derek Jeter, Yanks agree
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By Wallace Matthews and Andrew Marchand

ESPNNewYork.com

NEW YORK -- Derek Jeter agreed to a new contract with the New York Yankees on Saturday afternoon, a source with knowledge of the negotiations said.
Earlier Saturday, two sources said the Yankees and their captain were hoping to finish a contract that would pay Jeter approximately $17 million a year for three seasons with an optional fourth year at a lower salary, although those terms were among the details still to be worked out.
Those terms, obtained through conversations with several sources who requested anonymity, represent a pay cut of approximately $2 million a season from the 10-year, $189 million contract Jeter finished. The Yankees did, however, increase their initial offer of $45 million over three years.
Finishing the deal will allow Yankees general manager Brian Cashman to know exactly how much money he has in his budget heading into the winter meetings, which begin Monday in Orlando, Fla. The Yankees are expected to make a strong bid for free-agent pitcher Cliff Lee and possibly outfielder Carl Crawford.
Jeter was asking for a four- to six-year deal in the area of $22 million to $24 million a year, and he and his agent, Casey Close, seemed surprised by what they considered a lowball offer from the Yankees. At one point, Close described the Yankees' negotiating strategy as "baffling" and implied he felt his client should be treated as if he were Babe Ruth.

Earlier this week, ESPNNewYork.com asked a source involved in the negotiations what it would take to get the deal done. "Jeter and Close need to drink the reality potion" was the reply.

And coming off the worst offensive season of his career since he became an every-day player -- .270 batting average, 10 homers, 67 RBIs and an on-base percentage of .340 -- and without any concrete offers to match even the Yankees' initial offer, Jeter and Close gradually came to alter their demands.

The two sides met earlier this week in Tampa after Close called Yankees owner Hal Steinbrenner to set up the get-together. Jeter was present, as was Steinbrenner, Cashman and team president Randy Levine.
That started the ball rolling. As of Friday night, sources briefed on the negotiations were using terms like "significant" and "terrific" to characterize the tone and progress of the meetings.
And although Jeter had no real leverage, the Yankees also softened their stance. After publicly talking about how they would treat Jeter like any other player in a contract negotiation and judge his value solely on performance -- and pointedly expressing reservations about his age (36) and diminishing range in the field -- the decision to raise their offer even by a couple of million dollars per year is an indication that they were recognizing and rewarding his iconic status in club history.
The proposed new contract would place his average annual salary at about $17 million per year, keeping him as the highest-paid middle infielder in baseball, ahead of the Colorado Rockies' Troy Tulowitzki, who this week signed a 10-year deal worth $157.75 million, an average of nearly $15.8 million per season.
In the end, what happened between Jeter and the Yankees is what many expected to happen from the moment his previous contract expired at the end of the 2010 World Series.

"I think the deal was always going to get done," said a party involved in the negotiations. "It was inevitable that the Yankees and Derek Jeter would stay together. It just took a little time to get to where we all had to be."
That, and a round of reality potion for everyone in the room.
Wallace Matthews and Andrew Marchand cover the Yankees for ESPNNewYork.com.