NEW YORK -- Despite coming off an injury-plagued season, the New York Yankees chose to reward captain Derek Jeter for his years of good service by re-signing the shortstop Friday to a $12 million contract for 2014.
The new contract is $2.5 million more than the player option Jeter could have picked up for next year.
A source with knowledge of the negotiations told ESPN New York that the talks were largely held between Jeter and team owner Hal Steinbrenner, who both live in Tampa, Fla. Jeter's agent, Casey Close, handled the details of the contract.
Jeter, who turns 40 in June, could have opted out of the final season of his four-year contract and tried free agency. The original deal called for him to make $9.5 million in 2014 -- nearly half of the $17 million he had earned the previous three seasons. But Steinbrenner and Jeter made sure that didn't happen and helped each other's causes.
In 2013, Jeter played in only 17 games after stops and starts related to his dislocated ankle suffered in the 2012 AL Championship Series. He hit .190 in 63 at-bats.
Jeter expects to be healthy and ready to play by Opening Day, but the Yankees are interested in adding a quality backup in case he needs to serve as designated hitter more or cannot play.
"I'm really hoping we will see the Derek Jeter we have always seen," Yankees general manager Brian Cashman said Friday.
Although it was previously reported that Jeter's new contract would help the Yankees toward their 2014 goal of cutting salaries below the $189 million threshold, his new deal adds to payroll because of how the luxury tax is calculated.
If Jeter had picked up his option, his luxury tax number for next season would have been in the $10 million range, according to sources with knowledge of the how the luxury tax works. With the new salary, it will be in the $12 million range.
Sources said Steinbrenner felt it was worth it so the Yankees did not have to deal with Jeter opting out during an offseason full of questions.
The Jeter-Steinbrenner negotiations lacked the acrimony of the previous one in 2010, when Cashman dared Jeter to find a better deal.
"We understand his contributions to the franchise, and our offer has taken them into account," Cashman said in 2010. "We've encouraged him to test the market and see if there's something he would prefer other than this. If he can, fine. That's the way it works."
When the contract was finally announced, Jeter did not hide his frustration about the negative publicity and vowed it never would happen again.