Earlier today, Newsday cited a source "with knowledge of the situation", who on behalf of the Yankees said, "I don't see it happening with us. We pulled out in Nashville, and we haven't put an offer back on the table." Now I don't know about you, but I find it highly unlikely that the Yankees are completely out.
My personal opinion, is that the Yankees at this point aren't willing to give up Hughes and another quality prospect. They've demonstrated a strong unwillingness to include a player such as Chamberlain or Kennedy. And such unwillingness seems rather intelligent. They've also been unwilling, however, to include less valuable prospects such as Alan Horne, Jose Tabatha, or even Austin Jackson.
Whether that thinking will be best for the organization has yet to be seen, but what's clear now is that it's likely not the type of thinking that could land them Santana. I don't think any reasonable fan doubts the value of Phil Hughes. He projects as an ace, and is likely to be better than anyone offered in a Red Sox package. But the Yankees best offered package of Hughes, Melky Cabrera, and Jeff Marquez offers very little talent in addition to Hughes.
Melky Cabrera's greatest asset is his price. He will be cost controlled for years to come. But his abilities as a baseball player aren't very impressive to anyone outside of New York. Melky's power is very limited, he's slugged only .391 the past two seasons and his patience at the plate is inconsistent. Last year, among center fielders who qualified, Cabrera ranked 10th out of 13th in OPS. And even if he does eventually live up to his minor league line, an OPS of .769, his offensive output would be average for the weak hitting position of a center fielder.
On the defensive side, Cabrera has a rocket for an arm. But I don't think it quite makes up for his limited range and poor instincts. I play softball with some Yankees fans, and when someone takes a poor route to a fly ball, they dub that "pulling a Melky". When someone misjudges a ball at the wall that used to be a "Milledge" but after Delmon Young misjudged a David Ortiz walkoff home run last year, it's now more popularly known as a "Delmon".
As far as Jeff Marquez, it's not as if he doesn't have potential. Marquez is a 23-year-old sinkerball pitcher in the Yankees farm system. He typically throws in the low 90's and has a plus change but he needs much more development. Marquez doesn't have the ability to strike many batters out, and throughout his minor league career he's allowed more hits than innings pitched, which is concerning considering he's only in Double-A. He also has an injury history, which sidelined him for much of his 2006 season.
If the Yankees were serious about Santana, they'd definitely have to add more value to their package. It takes more than one high quality prospect to acquire any ace in a trade, let alone one considered the best pitcher in baseball. But as of now, it looks like they'll be content to go with the players they have, even if that means the Red Sox may acquire the Twins ace.