Lindsay Adler of The Athletic first reported O'Day had an agreement in place with the Yankees. MLB Network's Jon Heyman added O'Day is guaranteed $2.5 million in 2021 and there's a mutual option for 2022.
Relief pitching is an area of strength for New York heading into 2021. O'Day is joining a group that already includes closer Aroldis Chapman, Zack Britton, Chad Green, Luis Cessa and Jonathan Loaisiga.
Building a deep bullpen can help ease some of the burden on a starting rotation that seems to lack depth right now. Gerrit Cole is locked in as the Yankees' ace, but there are questions about who will follow him.
Corey Kluber is hoping for a rebound year in 2021 after throwing one inning last year with the Texas Rangers because of a shoulder injury. Masahiro Tanaka and James Paxton are still free agents. J.A. Happ left the Yankees to sign with the Minnesota Twins. Jordan Montgomery and Deivi Garcia combined to allow 44 earned runs in 78.1 innings last season.
O'Day has been a steady reliever since making his big league debut in 2008 with the Los Angeles Angels. The right-hander owns a 2.51 ERA in 604 career appearances for five different teams. He posted a 1.25 ERA with 28 strikeouts in 21.2 innings over the past two seasons with the Atlanta Braves.