Much to the dismay of Houston baseball fans, pitching ace and Houston native (well, almost) Andy Pettitte signed a one-year deal with the New York Yankees for $16 million today. The deal also has an option for 2008. The Astros had offered Pettitte $12 million with no option for another year. Pettitte played the last three seasons for Houston, but prior to that he won a slew of World Series rings in nine years with the Yankees. Pettitte's agent Randy Hendricks commented on the deal:
I had offered the Astros $14 million and an option. But they wouldn’t take it. Both teams know that if Andy gets hurt, he won’t take the option. The Astros flat turned me down.
It's unclear why the Astros wouldn't offer Pettitte a better deal, since his presence would likely encourage Clemens to return as well. Rumors of bad blood between Pettitte and the team have been flying all over the baseball news scene lately. The Astros are still searching for a pitcher to start behind the reliable Roy Oswalt. A deal with Jon Garland of the White Sox fell through earlier this week, indicating the Astros might be willing to make Pettitte a better offer, but no dice. There's no word on who they'll go after next. Whoever it is, the Astros need to move in and take care of business quickly because the number of attractive free agents left on the table is dwindling.

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It's unclear why the Astros wouldn't offer Pettitte a better deal,
It's not unclear.
Astros management has told 790 AM that the second-year option was a non-starter for the Astros, and the deal killer.
I know that they weren't willing to offer him the second-year option but I think a lot of baseball fans, and Richard Justice, in the article that's linked, feel like Pettitte is worth another couple million and the option for 2008, and there is speculation that there was more to it than just money.