Who would I sign?
FOLLOW-UPS
A couple of quick responses to the comments here on the eve of the long weekend:
? I listed a few outfielders not to sign. Who would I sign? As I’ve said in weeks past, I would bring back Hideki Matsui if the contract length was manageable. There are worse things than having a regular designated hitter–sure, it messes up roster flexibility, but those teams that don’t often wind up with a mélange at the position that proves to be not all that productive. This will be especially true for the Yankees if Matsui yields to Jorge Posada, which in turn opens up more playing time for Francisco Cervelli. Matsui’s skill set will probably age better than Damon’s. As for left field, I’d like to know what the trade market has in it and what the free agent situation looks like after non-tenders. Failing that, the Yankees might be able to engineer a platoon or rotation of some lower-cost players like Coco Crisp (assuming he can throw after shoulder surgery), Rick Ankiel and Austin Jackson. If they go with transient players in left for 2010, they can take a shot at free agent Carl Crawford next winter.
? In answer to another question: Scott Podsednik is pretty depressing. He’s a career .277/.340/.381 hitter, and even when he hits well by his standards, as he did this year, he’s not all that productive. His stolen base percentage was also on the low side of being acceptability, and if he can’t steal bases at a good percentage, he can’t really do anything. He’s also less of a fielder than you would expect given his speed. As for taking a flyer on rehabbing pitchers like Erik Bedard, Rich Harden and Ben Sheets, if the price is right it’s really all upside, and the thing to like about those guys, unlike betting on a Chien-Ming Wang comeback, is when they’re healthy they get batters to swing and miss.
? Some friends of mine are having a ham for Thanksgiving instead of a turkey. Anyone get a ham and Coke-glaze it in the Southern tradition? Anyone brave enough to deep-fry a turkey? Me, I’m wondering if I can get Chinese delivered tomorrow.
? Offering Damon arbitration seems like a good gamble to me on two levels. If he accepts you pay a high price in cash but you’re only committed to him for the season, so if he tanks you can even eat the money and let him go before the year is over. If he leaves, you get a first-round pick from whatever club signs him. Seems like a no-brainer to me.
? “Mr. Goldman, You sound like a major country leader we all know!” Stop picking on Luxembourg Prime Minister Jean-Claude Juncker. He’s trying his best, darn it.
? A happy Thanksgiving to all who are into that kind of thing.
Pinstriped Bible 
You made some good points.
1. I agree, the most I’d offer Damon is arbitration.
2. Matsui 1 year and an option.
3. Sign Sheets, and or Harden to an incentive laden short deal with an option.
4. Consider, not commit to, Lackey or Halliday, depending on the deal. Halliday if not giving away too much; Lackey if not giving to long a deal.
5. Consider a trade if Josh Johnson is available.
6. On the outfield, I go back and forth on a number of options, and I really can’t decide. My reaction is to go with a short-term fix and not Bay or Holliday. There are better options after next year.
It would be nice to get the draft pick for Damon, but there is no guarantee that it will be a 1st-rd pick. About half of the 1st-rd picks are protected, so those teams with protected picks, like the Mets for example, would forfeit their 2nd-rd pick (instead of their 1st-rd pick) for signing a Type A like Lackey or Damon or Holliday. So the Yankees would have to hope that Damon signs with a team that doesn’t have a protected 1st-rd draft pick.
And there is also the scenario that the team that signs Damon also signs another Type A free agent who scored higher than Damon on the Elias rankings. In that case, the Yankees would also not receive a first round pick for him. This screwed over the Blue jays last year, as they got a 3rd-rounder for Burnett since the Yankees signed two other Type A’s (Teixeira, Sabathia) who scored higher than Burnett on the Elias Rankings. And the Brewers got a 2nd-rounder for Sabathia.
They would still get the sandwich pick though between rounds one and two, regardless of where Damon signs.