"We're close to formulating a plan that we think is fair to everyone involved," said a high-ranking team official, who spoke on the condition of anonymity. "The idea is to get this done before he goes out on the open market.''
Sabathia, who just completed the third year of his seven-year, $161 million contract, has an opt-out clause that allows him to declare himself a free agent four days after the completion of the World Series.
Phone calls and email messages left for Sabathia's agents, Greg Genske and Brian Peters, were unreturned but it is widely assumed, including in the Yankees front office, that Sabathia will exercise the opt-out clause unless the club can come up with some sweeteners that will keep the left-hander in the Bronx.
Currently, Sabathia's deal calls for $23 million annually for the next four seasons. Sabathia went 19-8 with a 3.00 ERA for the Yankees this season, and has won 59 games for them in his first three seasons, but his effectiveness dropped off markedly in the second half of the 2011 season.
Sabathia was also ineffective in the playoffs, surrendering four runs in 5 1/3 innings in the Yankees' 5-4 loss to the Detroit Tigers in Game 3 of the AL Division Series, and allowed what proved to be the game-winning, and season-ending, run in Game 5. The Yankees have attributed Sabathia's second-half decline to manager Joe Girardi's shift to a six-man rotation, forcing Sabathia to work on an extra day's rest, in August and September, in order to accommodate A.J. Burnett and Phil Hughes.
The meeting was attended by co-owner Hal Steinbrenner, general manager Brian Cashman, team president Randy Levine, assistant GM Jean Afterman, senior vice president of baseball operations Mark Newman, pro personnel director Billy Eppler and superscout Gene Michael, among others.
Among the issues discussed were Cashman's contract status, which the team executive said was ''very close'' to completion, and the future of right fielder Nick Swisher, who the Yankees hold a $10.25 million option on for 2012.
"No decision on Swisher has been made yet,'' the source said.
Also discussed was the upcoming free agent season, with several high-profile pitchers including C.J. Wilson of the Texas Rangers and Roy Oswalt, formerly of the Philadelphia Phillies, expected to be available.
"I can't discuss any specific free agents,'' said the executive, "but believe me, every issue on our agenda was discussed and every available player was evaluated. It was all very positive.''
The meeting lasted approximately 6½ hours and afterward, the New York-based executives, including Cashman, Eppler and Levine, boarded flights headed back to New York. According to the team executive, no further meetings are immediately planned.
Eppler has interviewed for the vacant general manager position with the Los Angeles Angels. He declined to comment about the ongoing process, which could see the Angels hold a second round of interviews.
Wallace Matthews covers the Yankees for ESPNNewYork.com. Information from The Associated Press was used in this report.