NEW YORK -- The New York Yankees' need to cut payroll ends at the U.S. border.

	Contreras

For the second time in less than a week, baseball's biggest spender broke its budget for a big international acquisition, reaching a preliminary agreement Tuesday on a $32 million, four-year contract with Cuban defector Jose Contreras.

Last week, the Yankees agreed to a $21 million, three-year deal with outfielder Hideki Matsui, Japan's biggest slugger. The agreement with Contreras means the Yankees will have eight starting pitchers on the roster as soon as their deal to re-sign Roger Clemens is completed.

"We couldn't, the right word is we wouldn't, sacrifice the opportunity to sign these talents on the basis of reducing payroll first,'' Yankees general manager Brian Cashman said.

New York had been cutting payroll, letting go of relievers Mike Stanton and Ramiro Mendoza, re-signing third baseman Robin Ventura at a pay cut and negotiating with Clemens to take far less than the $15.45 million he averaged under his last deal. Cashman has tried to trade outfielders Rondell White and Raul Mondesi, and pitcher Sterling Hitchcock.

"The mindset is still for me to reduce payroll,'' Cashman said. "Obviously, when the opportunities to sign Hideki Matsui or Jose Contreras presented themselves, it was time for us to make decisions, to move now and continue to work on cutting the payroll down the line.''

Contreras, a right-hander who says he is 31, got the largest deal ever for a Cuban defector, topping the $14.5 million, four-year deal Cleveland gave pitcher Danys Baez three years ago. Contreras throws in the mid-90s, and the Yankees envision him as part of their rotation.

And what a crowded rotation it is.

New York has Andy Pettitte, Mike Mussina, David Wells, Contreras, former Cuban defector Orlando Hernandez, Jeff Weaver and Hitchcock. The Yankees anticipate that by the Jan. 8 deadline they will re-sign Clemens to a one-year contract worth $8 million to $10 million.

"We just need time to shake things out between now and spring training,'' Cashman said. "Time will tell. We certainly have an abundance of depth and quality depth. That's a position of strength.''

Contreras was the top pitcher on Cuba's national team until he defected in October, and beat the United States on one day's rest in the championship of the 1999 Pan American Games, striking out 13 in eight innings.

"For me, it's an honor to play for the Yankees,'' Contreras said in San Fernando de Masaya, about 20 miles from the Nicaraguan capital of Managua. "I really sacrificed some money to play for the Yankees, but for me they were the team I wanted to be with.''

While the Yankees thought Boston offered more, Red Sox spokesman Kevin Shea said that wasn't the case. The Red Sox may now turn to resuming trade talks with Montreal for Bartolo Colon or Javier Vazquez.

"Obviously, we are disappointed,'' Boston general manager Theo Epstein said after arriving back in Miami from Nicaragua. "We made every reasonable effort and then some to sign Jose Contreras. Jose is a special pitcher, but there is a certain amount of risk involved in signing pitchers who have never thrown an inning of professional baseball. Recognizing that risk, we went to the limit of fiscal sanity with our offer and would not go beyond.''

Seattle and Los Angeles also had officials in Nicaragua on Monday, the first day Contreras could negotiate.

"Although we had our head of international scouting, Rene Francisco, there, he was there really to monitor the situation,'' Dodgers spokesman John Olguin said. "We liked Contreras' ability a lot, although he would really not fit into our budget at this time.''

The agreement is subject to Contreras passing a physical and regulatory procedures dealing with Cuban defectors and the U.S. economic boycott of the communist nation.

"Jose Contreras is most certainly the premier amateur pitcher in the world and may be the best pitcher ever in amateur play,'' said Gordon Blakeley, the Yankees' vice president of international and professional scouting. "He has an exceptional fastball and breaking ball, plus a championship makeup, and we expect him to have great success at the major league level.''

Contreras called his family in Cuba to tell them he had signed with the Yankees. He said he told them playing in the big leagues would be no different from pitching against tough competition in his homeland.

"I assured them it would be the same as always,'' he said.

Contreras left the Cuban team after an Oct. 1 game against the Dominican Republic at Saltillo, Mexico. He entered the United States at San Ysidro, Calif., and was detained by the Immigration and Naturalization Service in San Diego.

He was freed and went to Florida, then left the United States, where he would have been subject to baseball's amateur draft.

Contreras pitched for Cuba's national team for seven years. He was 117-50 with a 2.82 ERA in the Cuban League, according to the Yankees.

His deal calls for a $6 million signing bonus, with $2 million payable in each of the first two years and $1 million in each of the final two years, and annual salaries of $4 million, $7 million, $7 million and $8 million.