Source: Yankees, M's halt talks on Lee

Trade talks between the Mariners and Yankees about left-hander Cliff Lee appeared to be at the 1-yard line Friday morning, but by the middle of the afternoon those negotiations had stalled, a source said.

It's unclear whether the Yankees and Mariners will re-start their talks. The Rays, Twins, Rangers and Reds also have shown interest in acquiring the biggest difference-making player on the trade market.

The Yankees had offered Seattle a three-player package, centered around catcher Jesus Montero -- who is rated as one of the best prospects in baseball, despite questions about whether he can be a catcher in the big leagues -- second baseman David Adams and a young prospect.

But the deal began to unravel, a source told ESPN.com's Jayson Stark, when the Mariners became concerned about the health of Adams, who is out with a sprained ankle.

Executives involved in the talks were all but certain on Friday morning that a Yankees-Mariners deal was forthcoming. By 3:45 p.m. ET, however, the Yankees were operating under the assumption they would not be getting Lee.

Meanwhile, a source confirmed for ESPNDallas.com's Richard Durrett that Rangers officials are working hard to acquire Lee. The Rangers have some room in their internal budget, but it's not known if it's enough to cover the entire amount owed Lee on his remaining contract, about $4.5 million.

The Rangers could get creative in a proposed package if Seattle would pay part of Lee's salary. That's what Texas did with San Francisco in the Bengie Molina trade, sending prospect Michael Main to the Giants as part of the deal so that San Francisco would pay Molina's salary. That kept the wiggle room in place that GM Jon Daniels may use in this trade or others.

The Yankees had believed all along that no other team matched up better than they would with Seattle in a Lee deal because they are offering a top prospect in Montero, who figures to have a long and productive career as a hitter regardless of whether he plays catcher or first base.

A baseball official with knowledge of the Yankees' thinking told ESPNNewYork.com's Andrew Marchand they viewed Montero as a plus-hitter and think he has improved his catching skills, though, among other things, he needs work on his accuracy on throws to second base despite his powerful arm. The Yankees also liked Double-A prospect Austin Romine and project him as a possible .275, 20-homer catcher. If they traded Montero, Romine would have made the move easier for the organization to absorb.

But the lingering question in their internal debate had been whether expending a trade piece such as Montero would be worthwhile, and in recent seasons, the Yankees have passed on acquiring Johan Santana, CC Sabathia and Roy Halladay under similar circumstances. And the Yankees' rotation is good enough to win without Lee.

But the Yankees knew that one of the AL East powers was going to be on the outside looking in at the conclusion of the regular-season jockeying, and they saw first-hand last October just how good Lee can be.

They have been well aware of the potential impact of Lee in another contender's rotation, as he was in helping the Philadelphia Phillies reach the World Series for the second straight season.

The Mariners might have felt compelled to move Lee for a couple of reasons. First, the sooner they move him, the more they can extract in their asking price. And secondly, there is always the inherent risk that Lee, who has had multiple abdominal strains in his career, could get hurt, which would gut his trade value.

Lee might be the closest thing baseball has seen to a sure thing on the trade market in years, because he demonstrated in 2009, after being traded from the Indians to the Phillies, that he is capable of pitching well in a pennant race, and that he responds well while on the postseason stage.

The Twins would look like a different team with Lee joining Francisco Liriano and Scott Baker at the front end of their rotation, and the Texas Rangers would become a more viable threat in the postseason.

The Twins were strongly considering including their top catching prospect, Wilson Ramos, in an offer, an official with knowledge of their thinking told ESPNNewYork.com's Marchand. With Joe Mauer in the fold, Ramos is expendable. The Twins know they would likely lose Lee in free agency, but have reasoned that they could make up for Ramos' loss with the extra draft pick.

If the Rays had stepped outside of their necessarily disciplined approach -- which has worked exceedingly well for them -- and acquired Lee for Jeremy Hellickson, or Wade Davis and Desmond Jennings, then they would have gone into the postseason with the extraordinary rotation of Lee, David Price and Jeff Niemann, with Matt Garza perhaps free to work out of the bullpen.

Lee was scheduled to pitch against the Yankees on Friday night in Seattle opposite Phil Hughes.

Buster Olney is a senior MLB writer for ESPN The Magazine.