If Jeter, a Type A free agent, had rejected arbitration and signed elsewhere, he would have cost his new team two picks in the 2011 First-Year Player Draft. That would have given Jeter less leverage in trying to attain the lucrative contract he seeks from the Yankees.
Had Jeter accepted arbitration from the Yankees, the Yankees could have gone to a hearing, where an arbitrator would have decided on a new one-year deal based upon his 2010 salary ($21 million).
In that scenario, Jeter could have potentially cost the Yankees upward of $25 million for a one-year deal.
That's more than the Yankees want to pay Jeter, who is not inclined to accept the Yankees' recent offer. Jeter is said to be looking for a contract of at least four years.
On Sunday, Casey Close, Jeter's agent, told the New York Daily News that the Yankees' negotiating stance to this point has been "baffling."
Cashman continued to respond on Tuesday, telling ESPN New York, "We understand his contributions to the franchise and our offer has taken them into account. 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."
In that report, Cashman said he was "certainly surprised" at Close's comments and said there were no further discussions scheduled with Jeter's camp. The two sides spoke on Monday, when Cashman informed Close of the Yankees' decision not to offer arbitration.
"We believe that Derek Jeter is the best person to play shortstop for this franchise moving forward," Cashman said. "Do we want to lose Derek Jeter? No. Do we want to treat Derek Jeter fair? Absolutely. Do we want to be treated fair at the same time? No question about it."
Jeter would have had a week to reject or accept the Yankees' arbitration offer.
In addition to Jeter, the Yankees did not offer arbitration to Mariano Rivera and Andy Pettitte, who are Type A free agents, and Type B free agents Kerry Wood and Lance Berkman. They did offer arbitration to right-hander Javier Vazquez, meaning they will receive Draft-pick compensation if he signs with another team. Vazquez and the Florida Marlins are reportedly closing in on a deal.