If he declines the fourth-year option, Jeter will be guaranteed $51 million, including a $3 million buyout. If Jeter exercises the option, he'll receive between $56 and $65 million. The amount depends on a points system. He earns points based on if he finishes anywhere among top six in AL MVP voting and if he wins World Series MVP, league championship series MVP, Gold Glove or Silver Slugger Awards.
Both sides made significant compromises the past two days to try to reach an agreement with Jeter.
Several teams courted Jeter, but the Yankees captain never considered leaving the team that drafted him in 1992.
Jeter, 36, is coming off the worst offensive season of his career, with career lows in batting average (.270), on-base percentage (.340) and slugging percentage (.370), although he did score 111 runs, drive in 67 and steal 18 bases. He also made his 11th All-Star team and won his fifth Gold Glove award at shortstop. Jeter enters the 2011 season just 74 hits away from 3,000 for his career.
On Friday, the Yankees reached a two-year agreement with closer Mariano Rivera worth about $30 million.
After settling with Jeter and Rivera, the Yankees will turn their attention to the pursuit of lefty Cliff Lee. Negotiations figure to intensify when the winter meetings start Monday in Lake Buena Vista, Fla.