According to several reports, the Yankees have agreed to a seven-year deal with the Japanese starting pitcher worth $155 million US. The deal is also believed to include an opt-out clause after the fourth season.
Major league teams had until 5 p.m. ET on Friday to sign the star 25-year-old.
The two Chicago teams, Cubs and White Sox, along with the Los Angeles Dodgers and Arizona Diamondbacks were known to have made bids for Tanaka, who sported a 24-0 record and 1.27 earned-run average last season for the Japan Series champion Rakuten Golden Eagles.
The Yankees, Dodgers and Cubs were said to be finalists for the right-hander, with New York bumping offer from six years to seven to secure a deal.
Tanaka's contract is the fifth-largest ever, behind Clayton Kershaw (seven years, $210M with Dodgers), Verlander (seven years, $180M with Detroit) , Felix Hernandez (seven years, $175M with Seattle) & CC Sabathia's original deal (eight years, $160M with Yankees).
In addition to his contract, New York is required to pay Rakuten a posting fee, now capped at $20 million US under a deal reached earlier this off-season between Major League Baseball and Nippon Professional Baseball.
Under the old, no-limit system, the Texas Rangers paid over $50 million for the right to negotiate with Yu Darvish before the 2012 season.
During the previous agreement, Boston obtained Daisake Matsuzaka from the Seibu Lions before the 2007 season for $51,111,111.11 and agreed to a $52 million, six-year contract. Texas got Darvish from the Hokkaido Nippon Ham Fighters before the 2012 season for $51,703,411 and gave him a $56 million, six-year deal.
Darvish finished second in 2013 Cy Young Award voting as the top pitcher in the American League.