The Yankees missed the playoffs this year for the first time in over a decade, while the Rays had October baseball in Tampa for the first time. The surprise told the Yankees "you need to do something."
What is that something?
The Yankees should aim young. They should sign Mark Teixiera at first base. This will be the biggest free-agent signing of the offseason, and he will end up wining a gold glove, having a .290 average, 40 homers, and 100 RBI. Nick Swisher may be a Yankee, but he is not the answer to the Yank's hole at first. He will make a good back-up.
Next signing; Caesar Izturis. He will be the infield back-up to replace the traded Wilson Betimoit. He is 28, and has a .979 career fielder, at second base, short, and third.
Pat Burrell is the next signing. He is relatively young, and a great hitter that could fill the eighth spot in the lineup. He will drive in nearly 100 runs, with 30 homers. The outfield for the Yanks would include a rotation of Xavier Nady, Johnny Damon, Pat Burrell, and Hideki Matsui,with Nick Swisher in the back-up role.
If Burrell cannot be signed, they could offer to Kapler or Raul Ibanez.
The Yankees may want to look into Rocco Baldelli. Yes, he has a mitochondrial disorder that fatigues him, but if he comes back from that, he's a good, young, hitter.
For the bullpen, the Yanks should look into Brian Fuentes. This good closer will have a great home as a Yankee set-up. They may also want to look into every-other-day-Eddie Guardado. He is a good vet, and might be valuable to a mostly young Yankee bullpen.
In the rotation, Yankees should look to sign the top two Brewers pitchers—C.C. and Ben Sheets. Sheets may not be as healthy as the Yankees would like him to be, but he is still a good option.
Lastly, the Yankees should re-sign Andy Pettitte and Pudge. Pettitte will fill the five hole for the Yankee rotation, and Pudge fills the catcher spot, that either an aging Jorge Posada or Jose Molina would have to take.
Obviously, the Yankees won't get every player on this list, but even getting a few could be the first step to re-building a dynasty.