The Yankees announced Tuesday that they are not going to offer arbitration to any of the potential free agents they have, meaning the players are free to sign with any club they want to and that club does not have to worry about giving the Yankees draft picks in return.

For the Yankees, it means that they can set and offer the contract prices they want to for those players and don’t have to rely on what an arbitrator might decide on.  It appears the Yankees feel that this off-season’s free agent market will be the same as last year’s.

Last year, the free agent market did not pay well outside of high-caliber players such as CC Sabathia, Mark Teixeira, AJ Burnett, Derek Lowe and a few others.  Instead, consistently good players were forced to sign for much lower than in previous years.  For example, Bobby Abreu had to sign with the LA Angels for $5 Million, after a 3 year contract with the Phillies and Yankees that saw him earn $16 Million in his final year of his previous contract.

The Yankees have one Type-A free agent in Johnny Damon.  Had the Yankees offered him arbitration and he signed with another team, they would have received a first or second round draft pick as compensation – but they also would hypothetically have to pay him higher then they might be planning to.

Xavier Nady, Jerry Hairston Jr, Erik Hinske, Andy Pettitte, Jose Molina and Hideki Matsui are all Type-B free agents, meaning the Yankees would have received supplemental round picks for each.

I do think the Yankees have made a smart decision here.  Nostalgia and team pride makes you want the Yankee Brass to keep everyone together, but we all know this is a business and all 7 of those free agents are replaceable.  If it was Derek Jeter in this situation, I’d go nuts about it.  However, when the dust settles, I would like to see at least Matsui and Damon still on the team, at least for the next 1-2 seasons.  I’d offer them both a 1 year contract with a team option for a second year that could become guaranteed based on plate appearances or some other performance measure.