If you will remember back to the winter meetings, the Cincinnati Reds were very interested in making a trade for Brett Gardner. The Reds ended up offering Brandon Phillips for Gardner, and the Yankees rejected the deal. The Yankees were interested in Homer Bailey, but Reds GM Walt Jocketty had said at the time, "...we're not trading him. We're trying to sign him."
Now it sounds as though the Reds are interested in trading Bailey if they can't sign him to an extension so that they can free up some money in their payroll. Presuming that the Reds are still interested in Gardner, then a Gardner for Bailey swap would be beneficial for both teams, especially since both players are going to become free agents at the end of 2014. In 2013, the right-hander posted an ERA of 3.49, FIP of 3.31, WHIP of 1.12 and BABIP of .284. Fun fact: Bailey's pitched two no-hitters in his career--one against the Giants last season, and a no-hitter against the Pirates in 2012 (How come the Yankees can't have nice things like no-hitters?).
It seems like the Yankees' need for Bailey is dependent on what happens with Masahiro Tanaka, where not signing Tanaka leaves the Yankees with two open spots in the rotation. If the Yankees can't sign Tanaka, then it's likely that they will fill the fourth spot either by signing a free agent or trading for someone, in which case Bailey makes a lot of sense. If Tanaka is signed and the Yankees trade for Bailey, then Pineda, Phelps, etc., can pretty much wave goodbye to their chances of competing for the 5th spot.
In a perfect world, I would prefer that they sign Tanaka, Pineda shows up to spring training as an ace (and we all laugh at Seattle), and the Yankees start 2014 with the fastest outfield ever. Would you trade Gardner for Bailey? Do you think the free agent options of Ubaldo Jimenez, Matt Garza, etc., are better options? Would you rather wait and see what happens with Tanaka?