Spurned by Cliff Lee, the New York Yankees reportedly began spending the money that was to be allotted to the left-handed ace by agreeing to a contract with catcher Russell Martin, a source told ESPN The Magazine's Buster Olney.

The deal, which carries a base salary of $4 million, was completed on Tuesday as Martin passed his physical, sources told Olney.

MLB.com first reported the agreement.

The former Los Angeles catcher was nontendered this month after the Dodgers refused to meet his demand for a guaranteed $5 million deal.

The Red Sox also had made an offer to Martin.

Martin appeared to be a rising star in 2007, when he batted .293 with 19 homers and 87 RBIs. He won a Gold Glove, a Silver Slugger award and made the first of two consecutive All-Star appearances. But his production has dropped off the past two seasons.