The Yankees expected to announce soon if Freddy Garcia or Bartolo Colon will be the team's fifth starter, with the other likely headed to long relief. Millwood, who will go to extended spring training, adds depth behind those veteran right-handers.
The Yankees gave Millwood no guaranteed money. He was signed to a pro-rated $1.5 million deal with incentives, but he has to be on the Yankees' 25-man big league roster by May 1 or the deal is void.
Millwood has the chance to earn $3.5 million more in performance bonuses: $500,000 each for five, 10, 15, 20 and 25 starts. He would get an additional $1 million for 30 starts.
Garcia gets $1.5 million if he is on the Yankees' opening day roster. His deal could be worth as much as $3.6 million if he makes 30 or more starts.
Colon, who is slated to make $900,000 if he is on the team, has no added incentives in his contract.
The Yankees have been talking with Millwood's agent, Scott Boras, since the offseason, but had been unable to come to an agreement until now. General manager Brian Cashman has been steadfast in saying he would pay only a certain amount for Millwood's services.
A major league contract was always out of the question. Garcia's and Colon's deals were also minor league deals.
At this point, it is unknown how soon the 36-year-old Millwood could pitch in a major league game. Though he has been working out, he has missed almost all of spring training. He likely will have to start the season in extended spring training or in the minor leagues.
Last season, Millwood pitched with the Orioles and went 4-16 with a 5.10 ERA. In 2009, he was 13-10 with a 3.67 ERA with the Texas Rangers.
Garcia, 1-1 with a 5.93 ERA in spring training, entered the competition for the fifth spot as the favorite because he won 12 games last season. Colon did not appear at all in the majors in 2010.
But Colon has outpitched Garcia this spring, going 1-0 with a 2.40 ERA. However, it is unclear if he has done enough to win the job.
Ivan Nova is expected to be the Yankees' No. 4 starter.
SI.com first reported that Millwood and the Yankees had reached agreement.
Andrew Marchand covers the Yankees for ESPNNewYorkcom. ESPNNewYork.com's Wallace Mathews contributed to this report. Information from The Associated Press was used in this report.