Pettitte agreed to a one-year, $12 million contract Wednesday with the Yankees. The deal includes several award bonuses: $1 million for winning the Cy Young Award, $1 million for World Series MVP and $500,000 for league championship series MVP.
Pettitte pitched for the relative bargain-basement price of $2.5 million in 2012 after ending his one-year retirement in March. However, his 5-4 record and 2.87 ERA -- most of it compiled before he went down with a fractured fibula in June, sidelining him for three months -- was impressive enough that the Yankees made re-signing him one of their top priorities this offseason.
Yankees general manager Brian Cashman did not immediately return a phone call seeking comment Wednesday, but the club had been quite open about its desire to bring Pettitte back for next season.
"As soon as the season was over, I spoke with Cash and he basically said, 'As soon as you can, we want you back. I don't know what you are going to do, but as soon as you decide, we want to sign you back,' " Pettitte said Wednesday. "That obviously is huge for a player. For Cash to reach out to me and tell me that, you feel like the organization feels pretty good about bringing you back and feels pretty good about what you have done."
Earlier this week, sources told ESPN The Magazine's Buster Olney that Pettitte had committed to returning for 2013. Pettitte, who will turn 41 in June, said he does not know if 2013 will be his final season.
"Whenever I say it again, that is going to be it," Pettitte said. "It wouldn't be smart for me to say that I would never play next year. I don't think would be smart because I have no idea."
Pettitte said after the team's AL Championship Series loss to the Detroit Tigers, he felt pretty sure he wanted to come back. Still, he was compelled to check with his wife and children to make sure they supported a return, which they did.
From the end of the season until the middle of November, Pettitte's main focus was helping his son, Josh, pick a college where he would play baseball. Josh, a right-handed pitcher, signed a letter of intent with Baylor.
Pettitte then began to work out again, and found out he still had the fire.
"When I retired, I just did not have the desire to work," Pettitte said. "Whenever I came back last year and Cash spoke to me and asked me if I would consider coming back, when I started working out, that desire was there again. Last year, the desire to compete was as strong as it has ever been in my career. I still feel like that right now. Now, obviously, there will be a point where the desire is going to be there and that competitive nature is going to be there, but you just can't do it."
On the heels of re-signing right-hander Hiroki Kuroda to a one-year, $15 million deal last week, the Yankees now appear to be set for starting pitching, with ace CC Sabathia and right-hander Phil Hughes guaranteed spots, and righties Ivan Nova and David Phelps likely to battle it out for the final starting job in spring training.
Pettitte slots in as the No. 3 starter behind Sabathia and Kuroda.
After retiring at the end of the 2010 season, Pettitte announced this past March that he would return. He made his first start for the Yankees on May 13, working into the seventh inning of a 6-2 loss to the Seattle Mariners.
Pettitte started eight more games before being hit by a line drive off the bat of the Cleveland Indians' Casey Kotchman in the fourth inning of a game at Yankee Stadium. After he returned Sept. 19, Pettitte pitched two outstanding games, shutting out the Toronto Blue Jays for five innings and the Minnesota Twins for six before losing his last start of the regular season.
Pettitte also pitched well in the playoffs, going 0-1 with a 3.29 ERA in two starts, one each against the Baltimore Orioles in the AL Division Series and the Tigers in the ALCS.
Pettitte is the winningest pitcher in postseason history, with a 19-11 record and 3.81 ERA in 44 career playoff starts.
Now with the winter meetings beginning Monday in Nashville, Tenn., Cashman can turn his attention to filling the Yankees' other needs -- catcher, right field, and bench.
Cashman also is working to finalize a deal to bring back closer Mariano Rivera, and according to a team source, the hope is to get that contract completed this weekend.
The Yankees also are pursuing free agent Russell Martin, their starting catcher the past two seasons. Sources within the organization characterize the two sides as "far apart" in negotiations.
The team is said to be interested in bringing back Ichiro Suzuki to play right field in place of Nick Swisher, and Raul Ibanez, who was pressed into everyday duty when regular left fielder Brett Gardner was injured, as a designated hitter/substitute outfielder.
The Yankees designated catcher Eli Whiteside for assignment to make room for Pettitte on the 40-man roster. The 33-year-old Whiteside was claimed off waivers from San Francisco on Nov. 5.
Information from ESPN The Magazine's Buster Olney, ESPNNewYork.com's Andrew Marchand and The Associated Press was used in this report.