Depending upon which you reports you believe, the Yankees may or may not have begun negotiating with Johnny Damon late last week. Various reports state that the two sides are worlds apart, with the Yankees offering 2 years and $18M and Damon requesting 4 years and $52M. Putting aside for a second the sheer lunacy of a 36 year old with questionable defensive skills and perhaps park-inflated value wanting a four year deal with an average annual value of $13M in a depressed market, I'm fairly confident the reported offers are accurate. Damon is a Scott Boras client, and since those figures came from notorious Boras mouthpiece Jon Heyman, I believe they are the actual figures being discussed.
We can infer a few things from this. Since it's all part of the negotiating process, I'd assume both sides would be happy offering/accepting more/less than what's currently on the table. If that's the case, we know the Yankees are willing to guarantee a second year and to do so at a market rate contract similar to what Bobby Abreu received from the Angels. We also know that Damon and Boras aren't ready to cave - at least not yet - in light of the Yankees recent outfield acquisitions of Curtis Granderson and Jaime Hoffmann. I'd imagine that they'll try to hold out until Matt Holliday and Jason Bay sign, further defining the outfield market. I just don't know if the Yankees will be willing to wait that long.
Meanwhile, according to a Ken Davidoff tweet on Thursday, there is increasing sentiment that the Yankees will wind up re-signing Hideki Matsui. While the Yankees still have room for both Damon and Matsui, it's more likely that only one or the other will be back next year. The Yankees likely prefer Damon since he can split time between DH and the outfield, but if he and Boras continue to drag their feet in negotiations, the club may turn back to Matsui, who hasn't been seriously rumored to be going anywhere else.
I'm sure this will be one of the predominant Yankee story lines as we move through the next few weeks of the off-season.