"The Yankees are going to overpay him," said a source with intimate knowledge of the discussions between the team and Casey Close, Jeter's agent. "The question is, how much are they going to overpay him?"
Several sources told ESPNNewYork.com on Monday that while the Yankees have yet to make a formal offer to Jeter -- or to Mariano Rivera, their other high-profile free agent, not to mention Cliff Lee, their primary target in the free-agent market -- offers are currently being prepared for all three.
And the one that is likely to get done first is Jeter's, possibly before Thanksgiving, with Rivera's soon afterward.
Lee's deal -- that is, assuming the Yankees outbid what is expected to be a field of perhaps as many as a half-dozen suitors -- is not expected to get done until mid-December, after the conclusion of baseball's winter meetings, which run from Dec. 6-9 in Orlando.
As for Andy Pettitte, the third member of the Yankees' so-called Core Four to be without a contract this winter, the club plans to wait to hear from the 39-year-old pitcher whether he plans to play again in 2011, a decision club officials believe will not be made until after Thanksgiving.
But the first order of business will be Jeter, whose 10-year, $189-million contract expired last Monday and who officially became a free agent for the first time in his 16-year career at 12:01 a.m. ET on Sunday morning when the Yankees five-day exclusivity window expired.
From conversations with two sources, both of whom requested anonymity due to the sensitive nature of the talks, Jeter's offer is expected to be for three years at somewhere between $15 million and $20 million per season.
That would be a slight paycut from his $21 million paycheck in 2010, but still well above the going rate for a shortstop who hit .270 last year and will hit his 37th birthday two weeks before the next All-Star Game.
"Some people will think the number is unfair," said one source, "And some are going to think it is way too much."
And both sources made it clear that in their opinion, Jeter will be paid more than he is currently worth on performance alone.
Both pointed out that when Jeter signed his contract after the 2000 Series, Jeter was 26 years old, coming off a regular season during which he batted .339 and a World Series of which he was named MVP.
Most importantly, the closest comparable deal in baseball was the 10-year, $252 million contract given by the Texas Rangers to Alex Rodriguez, at the time a shortstop like Jeter.
Ten years later, the price of free agents has come down significantly, and so has Jeter's production.
Although the monetary value of Jeter's deal remains the third-highest in the history of baseball, exceeded only by A-Rod's original deal and the 10-year, $275-million contract extension he signed with the Yankees following the 2007 season, Jeter's 2010 production more closely resembled that of players earning a fraction of his salary.
"Jeter's numbers are exactly the same as Marco Scutaro's," one of the sources said. "He's gonna get paid a lot more than Scutaro, of course. He's gonna get more than the best shortstop in the league, Hanley Ramirez, who makes less than $12 million a year."
Ramirez, the Florida Marlins' 26-year-old shortstop, led the NL in hitting in 2009 with a .342 average and has hit as many as 33 home runs in a season. Last year, Ramirez batted .300 with 21 homers and 76 RBIs. He is about to entetr the third year of a six-year, $70-million deal that paid him $7 million in 2010 and escalates to $11 million for 2011.
Scutaro, on the other hand, is entering the walk year of a two-year deal that will pay him $5 million for 2011, with a $6 million club option for 2012. His 2010 stats were remarkably similar to Jeter's. Scutaro batted .275 to Jeter's .270, hit 11 home runs to Jeter's 10, drove in 56 runs to Jeter's 67. He was outscored by Jeter, 111-92, but struck out just 71 times to Jeter's 106, and grounded into nine fewer double plays (13-22).
In fact, Jeter's numbers are not that much different from those of Ian Desmond, the Washington Nationals second-year shortstop who hit .269 with 10 home runs and 65 RBIs and plays for the major league minimum salary of just over $400,000 a year.
Jeter, of course, commands much more money than Scutaro for several reasons, not the least of which is the value of his brand to the Yankees and the fact that he was a leading member of the five Yankee teams that won the World Series between 1996 and 2009. He has also been the team captain since 2003 and is the undisputed face of the franchise.
Because of that, his value to the Yankees is undoubtedly higher than it would be to any other franchise, a fact that no doubt frustrates the Yankees front office, which knows the market would allow it to play a much harder brand of ball than Jeter would like to see or much of the Yankees fan base would be willing to tolerate.
As one of the sources put it, "Where else is he going to go? Everything he's got, all his commercials, are tied to him playing in New York. If he leaves the Yankees, a lot of that stuff goes away, and he knows it."
According to both sources, no other team has shown any interest in Jeter or yet contacted his agent. "I think the other teams feel like there would be no point to it," one of them said.
And although the Yankees appear to hold most of the leverage in this one, both sources agreed they are unlikely to wield very much of it. Last week, Hal Steinbrenner, the Yankees managing general partner, seemed to indicate the club would take a harder than expected line with Jeter when he said on a conference call, "We absolutely want [Jeter] back. But having said that, we're running a business here, so if there's a deal to be done, it's going to be a deal that both sides are happy with."
Odds are it will be a deal Jeter will be happy with. For all their talk about not being afraid of making a tough choice, it appears the Yankees would rather give Jeter more than his play would command if only to avoid the perception of being ingrates, or worse.
"The Yankees are well aware that Derek Jeter is a legacy player," said one of the sources. "And you have to be very careful how you treat players like that."
The answer is, you overpay them. The question remains, by how much?
Wallace Matthews covers the Yankees for ESPNNewYork.com.