Amazing, isn’t it?
Last year the Yankees had a payroll of $208 million. They let go the contracts of Pettitte, Mussina, Abreu, Giambi, and Pavano — close to $88 million among these 5 players. With Tex, AJ, and CC that total for these three players is close to $61 million.
So, in fact, the Yankees are under $200 million with the need for a 5th starter (that they could fill from within if Pettitte does not accept their $10 million offer), and they need to settle arbitration with Xavier Nady and Melky Cabrera. With these guys and with 1 or 2 more bench players, the Yankees will still be under $200 million.
All of this information can be found on Will Carroll’s post on Baseball Prospectus.