Chacon, who earned $2.35 million in 2005, asked for $4.15 million for the 2006 season. The Yankees countered with an offer of $3.1 million.
Chacon went 7-3 with a 2.85 ERA in 14 games (13 starts) for the Yankees after being acquired from the Rockies before the July 31 trade deadline. The 28-year-old held opponents to a .225 batting average with the Yankees, allowing three runs or fewer in 10 of his 12 starts.
The right-hander started Game 4 of the American League Division Series against the Angels, getting a no-decision in the Yankees' 3-2 victory. In the outing, he allowed two runs on four hits over 6 1/3 innings, helping the Yanks force a Game 5 back in Anaheim. He is expected to win a spot in the starting rotation this spring.
Small, who made $350,000 last season, asked for a raise to $1.45 million. The Yankees countered with $1.025 million.
Small, a 34-year-old journeyman, compiled a 10-0 record in the regular season, helping New York capture an eighth consecutive American League East title.
After starting 2005 in the Yankees' Minor League system, Small was called up after the All-Star break to help fill some holes in the Yankees' banged-up rotation. After making his Yankees debut on July 20, he went back and forth from the bullpen to the rotation, filling in where necessary.
On Sept. 29, Small defeated the Orioles at Camden Yards, completing a perfect season. Small became just the fourth pitcher in big-league history to win at least 10 games without a loss, joining Tom Zachary, Dennis Lamp and Howie Krist.
In Small's nine starts, the Yankees were 8-1, though he is expected to fill a long-relief role in the bullpen this season if the rest of the rotation is healthy.
Mark Feinsand is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.