The major-league side of the deal is worth $2.5 million and includes a 2015 option. Though he will not start the year in the major leagues as he continues his rehab from shoulder surgery, the Yankees hope a healthy Bailey could be in the mix for late-inning work in their bullpen.
Bailey, 29, pitched in 30 games for the Boston Red Sox last season, recording a 3.77 ERA and striking out 39 hitters in 28 2/3 innings before undergoing season-ending surgery.
Bailey has 89 career saves, but just 14 came during his two-year stint with the Red Sox. The rest came over three seasons with the Oakland Athletics, where he was a two-time All-Star. Bailey also was named the 2009 American League Rookie of the Year with the Athletics.