This is from Pete Caldera:

There continues to be a dialogue between the Yankees and Andy Pettitte, though the club remains unconvinced the left-hander will accept a one-year offer for $10.5 million. Still, the Yanks prefer Pettitte over the pool of current free agents, according to a source with knowledge of the situation.

Unless a free agent starting pitcher such as Ben Sheets would accept a one-year deal at a severe discount, the Yankees seem content to head to spring training with Phil Hughes heading a field for the No. 5 spot, which includes Alfredo Aceves, Ian Kennedy and non-roster invitee Jason Johnson.

It looks like the rumors from months ago that Pettitte had a 3/$35 million offer was false. It was probably the Hendricks Brothers trying to stir the pot and get more money into Pettitte’s contract. I really think the Yankees should go for $11 or $12 million with the possibility of performance incentives. On the other hand, if I were Andy Pettitte, I’d feel a sense of obligation and know that $10 million is more than the average American makes in their lifetime and I’d just shut up and pitch one final season in the new Stadium. There is still 3 weeks left before pitchers and catchers report, so there’s plenty of time to strike a deal.

Then again, there are a few more free agent pitchers left and the Yankees do have some young arms available. It’s really Pettitte’s call here.