The Yankees and Derek Jeter are making a big mistake with the way they are handling the negotiations for a new deal. After Jeter’s agent, Casey Close, referred to the Yankees negotiating position as “baffling”, GM Brian Cashman responded with this gem of a quote:

"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."

It wasn’t exactly a “thank you for all you’ve done, Derek” and it made the Yankees look small. But, not to be outdone, word leaked from Jeter’s camp that the shortstop was seeking a six-year/$150 million deal. That was later amended down to somewhere around four or five years for “only” $23 or $24 million. Pretty good money for a guy coming off a year where he hit .270/.340/.370.

The fact is the Yankees need Derek Jeter at shortstop in 2011. There are no in-house candidates, Eduardo Nunez didn’t exactly set the world on fire at AAA this year, and the free agent pool is weak. Throw in the fact that barring injury, Jeter will become the first Yankee to get 3,000 hits in 2011 and his return should be assured.

But the Yankees’ problem is beyond 2011. Maybe Jeter’s 2010 campaign was an aberration and he will return to his prolific hitting ways next year, but what if he doesn’t. What if he is like 99% of the shortstops who came before him and plays progressively worse after age 36?

And Jeter is rightfully looking at all the mega-deals the Yankees have handed out and wondering why he isn’t worthy of one. He has always played hard, played hurt and he has never embarrassed the franchise. For fifteen seasons, Jeter has been a great ballplayer on the field and a great ambassador off of it.

What the two sides need to do is find the middle ground. A series of team and player options, triggered by certain performance levels would make the most sense. That followed by a personal services contract after Jeter’s playing days have ended would also probably ease the turmoil. Whatever approach they take, they would be smart to erect a “cone of silence” and keep everything out of the press from this point forward. Neither side will look very good if the current rhetoric continues.