Let's get one thing out of the way right off of the bat: Derek Jeter is an all-time great for the New York Yankees, and he'll one day be enshrined in Cooperstown. While clearly past his prime, the 36-year-old is still a useful player ... at the right price.

In the biggest soap opera of the offseason, the Yankees appear to be taking a hard-line stance in contract negotiations with their shortstop. It's the smart play. Why? Because they know the above paragraph is 100 percent true. They also know that Jeter needs the Yankees far more than the Yankees need him, for a variety of reasons.

For starters, the Yankees are the only team that might consider giving Jeter eight figures a season, mostly for PR reasons that have little to do with on-field production. But more importantly, Jeter knows that he isn't "Derek Jeter" wearing any other uniform. Sure, he would still put up the same numbers, but the perception of him as a winner is driven by the image of him in pinstripes. If he really threatens to sign elsewhere, then general manager Brian Cashman should call his bluff. New York won 95 games last year almost in spite of Jeter, and although his .270 batting average/.340 on-base percentage/.370 slugging percentage isn't bad for a shortstop, his production is easily replaceable, particularly when you factor in his porous defense (that inexplicable Gold Glove award notwithstanding).

Last offseason, then 34-year-old shortstop Marco Scutaro signed a two-year, $12.5 million deal with the Boston Red Sox on the heels of posting a .379 on-base percentage for the Blue Jays. It's hard to imagine the market for Jeter would be that much more robust. Why should the Yankees pay him a lot more than what the market demands? They don't owe Jeter anything, having paid him in excess of $200 million in his career and given him a platform for fame and fortune beyond what any boy from Kalamazoo, Mich., could possibly imagine.

Within the clubhouse, players often judge themselves based on their paychecks, and I'm sure it sticks in Jeter's craw that Alex Rodriguez will be making more than $20 million a year for the next seven seasons. But A-Rod had an out in his previous contract that allowed him to become a free agent again in 2007 at the age of 32. If Jeter had a similar out clause, he probably would have signed another nine-figure deal. Instead, he's hitting free agency for the first time in his career as a 36-year-old with declining skills coming off of the worst season of his career. As Hal Steinbrenner has said on a couple of occasions this month, "I'm running a business here," and there's no reason he should feel obliged to give Jeter more than what the market dictates. A little bit more, in good faith? Sure. A lot more? No way, particularly if it hamstrings the team's flexibility elsewhere.

If the Yankees can bring Jeter back for a contract that is close to what the market would bear, then by all means they should do it. The offensive standard for shortstops is pretty low, and Jeter can still exceed it. Beyond that, the strikeout skills of the Yankees' pitching staff are such that his defensive shortcomings are minimized. And, of course, his savvy and experience and chase for 3,000 hits are nice bonuses.

But if they let him walk, his production could be replaced for a fraction of the price by a free agent such as Juan Uribe. Or the Yankees could take a chance on 23-year-old prospect Eduardo Nunez. He might be a disaster offensively, but Joe Girardi could hit him ninth, which would minimize the damage. One of the biggest problems with having Jeter on the roster is that Girardi might feel compelled to hit him leadoff again, and his poor 2010 production in that spot was a tourniquet to the Yankees' offense. If Jeter is gone, Girardi would be spared from having the "you need to hit ninth, not first" conversation with him, and optimize the lineup by getting speedy OBP fiend Brett Gardner up top, and Jeter's replacement at the bottom.