NEW YORK -- Despite coming off an injury-plagued season, the New York Yankees chose to reward captain Derek Jeter for his years of good service by re-signing the shortstop Friday to a $12 million contract for 2014.

The new contract is $2.5 million more than the player option Jeter could have picked up for next year.

Derek Jeter will become the longest-tenured player in New York Yankees history when he takes the field on Opening Day, breaking the record he currently shares with Mariano Rivera. Rich Schultz/Getty Images

A source with knowledge of the negotiations told ESPN New York that the talks were largely held between Jeter and team owner Hal Steinbrenner, who both live in Tampa, Fla. Jeter's agent, Casey Close, handled the details of the contract.

Jeter, who turns 40 in June, could have opted out of the final season of his four-year contract and tried free agency. The original deal called for him to make $9.5 million in 2014 -- nearly half of the $17 million he had earned the previous three seasons. But Steinbrenner and Jeter made sure that didn't happen and helped each other's causes.

In 2013, Jeter played in only 17 games after stops and starts related to his dislocated ankle suffered in the 2012 AL Championship Series. He hit .190 in 63 at-bats.

Jeter expects to be healthy and ready to play by Opening Day, but the Yankees are interested in adding a quality backup in case he needs to serve as designated hitter more or cannot play.