The Yankees reached a preliminary agreement with Sabathia on Wednesday, following an in-person meeting between general manager Brian Cashman and Sabathia in California, sources with knowledge of the deal told ESPN The Magazine's Buster Olney.
A source told ESPN.com's Jayson Stark there are "zero major roadblocks" that would prevent the Yankees from finalizing an agreement with the 28-year-old left-hander.
Not all terms of the deal are agreed to yet, the source indicated. Sabathia also would need to take and pass a physical exam.
Sources told Olney that, to get the deal completed, the Yankees added a seventh year to their original six-year, $140 million offer, bringing the total package to seven years and $161 million -- at $23 million a season, by far the biggest contract for any pitcher in history. He also confirmed that Sabathia can opt out of the deal after three years -- addressing his concerns about living in New York with his wife and children.
The New York Post first reported Wednesday on its Web site that Sabathia, the prize of this year's free-agent class, had decided to go with the Yankees after fielding offers from a number of teams.
Also, the Yankees and Sabathia are working on the no-trade language for a clause that is still being negotiated.
Sabathia will make his opt-out decision after the 2011 season, with four years remaining on the deal. It could allow him to leave, or renegotiate with the Yankees.
"I'm sure every team in baseball would love to have him. He's a guy who's an intimidating factor on the mound," Yankees captain Derek Jeter said at the winter meetings.
Yankees general manager Brian Cashman left Las Vegas on Tuesday for a quick trip to the pitcher's home in the San Francisco area, sparking the final stages of negotiations.
"There's a lot of layers in the process, Until that process is completed I'm kind of prevented from saying too much," Cashman said. "Legally I've got to protect myself. And, you know, you're never done until you're done, and so, we're not done."
Cashman made a six-year offer to the former AL Cy Young Award winner on Nov. 14, the first possible day to negotiate with free agents, and met with Sabathia in Las Vegas on Sunday and Monday. He had told the pitcher's agents that if it would be helpful, he was willing to travel to meet with Sabathia and his family in California.
At 3 p.m. Tuesday, Cashman received the invitation.
"I said, 'Let's go,'" he recalled. "When the opportunity was given, that's a flight I had to take."
He bought a one-way ticket for a 5 p.m. flight to Oakland and took a car service to Sabathia's home in Vallejo, where he met with the pitcher, Sabathia's wife and children, and Brian Peters, one of the star's agents.
Cashman joked about flying commercial.
"We're not the Red Sox," he said, a reference to the team's use of owner John Henry's private plane during negotiations with Daisuke Matsuzaka two offseasons ago.
"They certainly are not, thank goodness!" Red Sox president Larry Lucchino responded in an e-mail to The Associated Press.
Cashman couldn't recall ever before making a recruiting trip to a free agent's home. He had remembered seeing Sabathia's home on an episode of "MTV Cribs."
"When I walked in, I did tell him, it was like: I've been here before," Cashman said.
After putting the framework for an agreement in place, Cashman spent the night at a San Francisco hotel before taking an 8 a.m. flight back to Las Vegas on Wednesday. Yankees officials, meanwhile, participated in negotiations by phone.
"Sabathia is now excited about becoming a Yankee," a source told Olney.
Sabathia had been courted by the Milwaukee Brewers, the San Francisco Giants and the Boston Red Sox. The Los Angeles Dodgers said that Sabathia, who lives in California, had expressed interest in playing there, too, although the team did not publicly make him an offer.
But in the end, it was clear that no other team was going to come close to what the Yankees offered. That was despite varying signals from the Dodgers -- owner Frank McCourt reached out to Sabathia personally -- as well as the Giants, who had talked about meeting with Sabathia this weekend, and the Los Angeles Angels.
To the Yankees, Sabathia was more than just the No. 1 prize on the free-agent market. He was the centerpiece of their entire offseason game plan. They went into the winter determined to add Sabathia and two other free-agent starters.
They have also aggressively pursued A.J. Burnett, Derek Lowe and Ben Sheets, and have made a one-year, $10 million offer to retain Andy Pettitte. So a rotation of Sabathia, Joba Chamberlain, Chien-Ming Wang and two free-agent starters to be named later puts the Yankees in prime position to return to the postseason after a one-year absence.
But without Sabathia, that rotation would have had a whole different look. And had the Yankees not been able to land him, they might have shifted philosophies and made a major play for the biggest bats on the market -- Mark Teixeira and Manny Ramirez.
In fact, the Yankees had begun to send signals that if Sabathia didn't accept their offer soon, they were ready to pull it off the table and move on. But all that became a moot point late Tuesday night, when Cashman was able to reassure the Sabathias that they could play and live happily in New York.
Sabathia, who was dealt by the Cleveland Indians to the Brewers before last season's trade deadline, went 11-2 with a 1.65 ERA in Milwaukee, carrying the Brewers into their first playoff appearance since 1982.
He has a career record of 117-73 and a 3.66 ERA in eight big league seasons, mostly with the Indians. He won the American League Cy Young Award in 2007, going 19-7 with a 3.21 ERA as the Indians reached the AL Championship Series that season.
Friends of Sabathia have been making clear for some time now that had one of the West Coast teams been able to make an offer close to the Yankees' bid, Sabathia almost certainly would have taken it.
"He's one guy, I'm absolutely convinced, whose decision will not be about getting the last dollar," one longtime friend of Sabathia's said earlier this week. "That's not the way he thinks. This isn't a business decision for him. This is a life decision. So if he chooses New York, it will be because he wants to be there, not because they were the team that offered the most money."
As it turned out, however, the Yankees offered by far the most money.
Among all players, it will trail Alex Rodriguez's $252 million, 10-year agreement with Texas; A-Rod's $275 million, 10-year deal with the Yankees; and Derek Jeter's $189 million, 10-year contract with the Yankees, ending up in the same area as Manny Ramirez's $160 million, eight-year contract with the Red Sox.
Olney reported that there is no deferred money in the deal. What that means is this Sabathia deal increases the record for real, or present-day, value for a deal for a pitcher from the $20.5 million set by Santana's deal with the Mets last season to $23 million for Sabathia.
Last year, Santana got $137.5 million for six years from the Mets, but that included deferred money. The deferred money made the present-day or real value of the deal -- that is how Major League Baseball calculates it -- about $20.5 million per year. That means the present-day value of Santana's deal was only $123 million.
The Brewers made a five-year, $100 million offer, but with much of the money deferred. The Giants, according to sources, never made a formal offer, but indicated they could be willing to extend a bid slightly lower than the Brewers' offer if the deal was structured carefully.
GM Doug Melvin said he was notified at 7:30 a.m. Wednesday that the Brewers were no longer in the running.
"We put our best foot forward," Melvin said. "We made a substantial offer. We looked at some numbers and we gave some serious consideration to offering a sixth year. We didn't do it, but we had given it consideration. We were still mulling the numbers on the sixth year, we asked our financial people to look at it. But it appears it would not have made a difference, anyway."
The Dodgers and Angels were interested but had other priorities. And while Sabathia and his agent, Greg Genske, met with the Red Sox during their visit to Las Vegas, the Red Sox never loomed as serious bidders.
So in the end, there was a vast economic difference between the Yankees' offer and anything else on the table. Yet Sabathia still couldn't bring himself to agree until he and his wife had convinced themselves that New York was the right place for them to play, live and raise a family.
By the time Cashman walked out their door late Tuesday night, those doubts had melted, and his team's mission was accomplished. Sabathia was going to become a Yankee.
Information from ESPN The Magazine's Buster Olney, ESPN.com's Jayson Stark and The Associated Press contributed to this report.