The Padres will send $1 million to pay the roughly $4M million left on Headley's $10.53M 2014 salary. He is a free agent after the year.
The Yankees, in need of infield help, have been scouting Headley, who's looked better recently since getting shots to quell a back issue. Headley is still having an atypical season, showing far less power than usual. Toronto was thought to be the only other team in the mix for Headley.
Headley's value has slipped as he's approached free agency, and the Padres weren't in a position to offer him a qualifying offer, which was expected to be about $15 million. San Diego had offered Headley a $33-million, three-year deal over the winter, which he rejected. He hasn't played up to his level in the second half of 2012, the year he led the NL in RBI.
Headley, 30, is hitting .229/.296/.355 with 12 doubles, seven homers and 32 RBI this season. He finished fifth in NL MVP voting in 2012 when he hit .286/.376/.498 with 31 homers and 115 RBI.