Teixeira, who hit .308 with 33 home runs and 121 RBIs in 2008, will receive an eight-year, $180 million deal from the Yankees with a full no-trade provision.
The final three teams in the race to sign Teixeira were the Red Sox, Nationals and Yankees. However, it was the Yankees who stepped up their heavy pursuit of Teixeira on Tuesday, as first reported by SI.com.
It appears as if the Yankees were given the last chance to sign Teixeira, an indication that New York was near the top of his list all along. The Yankees quietly remained in contact with the Teixeira camp, but after spending $243.5 million on star starting pitchers CC Sabathia and A.J. Burnett, they didn't appear anxious to be the market setter.
Teixeira's deal now raises the Yankees' offseason spending spree to $423.5 million. Just last Thursday, they gave Sabathia a $161 million, seven-year contract and Burnett an $82.5 million, five-year deal.
The Yankees, preparing to move into their pricey new ballpark, will hold the four largest contracts in the sport. Third baseman Alex Rodriguez has baseball's highest deal at $275 million over 10 years, and shortstop Derek Jeter is second at $189 million over 10 years.
Teixeira's agreement came just one day after the Yankees received a $26.9 million luxury tax bill for 2008, when their streak of 13 consecutive playoff appearances ended.
Despite its winter spree, New York had more than $80 million in contracts come off the books -- Jason Giambi, Carl Pavano, Mike Mussina, Bobby Abreu, among others won't return -- after the 2008 season. The Yankees still intend to keep their payroll around the $210 million range, so they may entertain trade offers for one of their corner outfielders, such as Xavier Nady or Hideki Matsui.
While there were rumors that Teixeira, a Severna Park, Md., native, preferred to be on the East Coast, there never was any real evidence of that. He loved his time in Anaheim and continued to live in the Dallas area, so those suggestions may have been overplayed.
The Red Sox threw a curveball late last week when owner John Henry announced they were no longer "going to be a factor'' following a meeting at Teixeira's Dallas-area house. But after a little while, it became clear that Henry only meant that they intended not to up their bid, not that they were pulling out of the derby entirely.
But Red Sox executives met with Teixeira and agent Scott Boras last week and were told they were being outbid. Teixeira also had discussed signing with the Baltimore Orioles and Washington Nationals.
"We would have loved to have had the player, who appealed to us because of the special circumstances of where he's from and where we are. We diverted from our plan to try to get him," said Orioles president of baseball operations Andy MacPhail. "But at the end of the day, it was just too much to pay for one player. It would handicap our ability to go forward."
While Henry's team remained in the running, Angels owner Arte Moreno pulled out for real on Sunday, announcing they had given up the chase. Moreno had submitted a proposal believed to be for $160 million at the winter meetings and hadn't moved from that initial offer.