The New York Yankees swooped in Tuesday and hooked prized free agent Mark Teixeira, reaching agreement with the first baseman on an eight-year contract worth $180 million, three sources involved in the negotiations said.

The agreement, which is subject to a physical, includes a signing bonus of about $5 million paid out over the first three years of the contract, no opt-out clause and a complete no-trade provision, the sources said.

With the Red Sox, Angels, Nationals and Orioles making well-documented runs at signing Teixeira, the Yankees made an offer weeks ago, but then withdrew it; their intention all along was to make an offer, which they did formally on Tuesday, if it fell within parameters acceptable to the organization.

The contract will pay Teixeira, who made it clear he wanted to make a decision on where to play next season and beyond by Christmas, an average of $22.5 million per season. Boston's offer to Teixeira was for $168 million over eight years, an average of $21 million a year.

"They have the revenue sources that most don't have, and they have a lot of money coming off the books this season," Angels general manager Tony Reagins, who had hoped to retain Teixeira, told The Associated Press on Tuesday night. "So if they're willing and able to spend, I'm pretty sure they've made some good investments."

The Yankees indeed shed $88.5 million from their books (included in that total -- $23.4 million on Jason Giambi, $16 million on Bobby Abreu, and $11 million to both Mike Mussina and Carl Pavano), and even with the Teixeira contract, they expect their payroll to fall below $200 million. New York has committed $423.5 million in salary in the past month, with $161 million going to left-handed pitcher CC Sabathia ($23 million per over seven years) and $82.5 million to right-hander A.J. Burnett ($18.5 million per over five) last week alone.