As George Steinbrenner's oldest son, Hank, yesterday became the candidate to permanently replace him as the New York Yankees' managing partner, a highly placed source in Major League Baseball said Steinbrenner turned down a two-year suspension because he feared it would jeopardize his position as a U.S. Olympic Committee vice president.

However, USOC President Robert Helmick said the organization's executive committee will review Steinbrenner's status at its next regular meeting, and there are indications the topic will be hotly discussed. In addition, owners of the other major league clubs, who must approve the transfer of control over the Yankees, are giving little indication of how they will vote, although Vincent has agreed to approve Hank Steinbrenner.

George Steinbrenner and a number of his associates said he has been planning for several years to hand over day-to-day operation of the Yankees to younger members of his family so he could devote more of his time to the USOC and to his Tampa-based American Ship Building Co. His associates cited those desires as the main reasons why he capitulated to Baseball Commissioner Fay Vincent after there had been strong indications he would challenge Vincent in court.

On Monday night, Vincent announced Steinbrenner would be stripped of his control over the Yankees because he paid a self-described gambler for information he intended to use against former Yankees outfielder Dave Winfield.

Yesterday, a series of restrictions on the club and its dealings with Steinbrenner were released. According to the four-page order "no Yankees officials or employees shall confer, consult, advise or otherwise communicate, either directly or indirectly, with George M. Steinbrenner III on any matter involving the New York Yankees or baseball until further order of the commissioner." Every six months, the club will have to certify in writing to the American League president that no such communication has occurred. If any such communication does occur, it must be immediately reported.

In addition, during the next five years, the Yankees will have to seek approval from the American League president for the "hiring, firing, promotion, demotion ot reassignment of any officer of the club." This does not apply to field managers.

Any violation of the order will "constitute conduct not in the best interests of baseball" and subject the violator to disciplinary action by the commissioner.

Monday night's announcement was preceded by a nearly 11-hour meeting between Vincent, Steinbrenner and their respective legal teams. The meeting began with Vincent giving Steinbrenner his written opinion and a set of sanctions that involved a two-year suspension and a three-year probation.

Steinbrenner "had all kinds of problems with the word 'suspension,' " said the source. "He said he couldn't take it because of the Olympic Committee."

Neither Steinbrenner nor his lawyers, Stephen E. Kaufman and Paul Curran, proposed an alternative, the source said. So Vincent did.

The source added Vincent "was not looking for a deal" and "would not be budged" from the alternative he outlined. The rest was left to Kaufman, Curran and Vincent's representatives -- Deputy Baseball Commissioner Steve Greenberg, former federal judge Harold Tyler and John Dowd, the attorney who led baseball's investigation of Steinbrenner.

"There were a lot of things to go through," Vincent said yesterday. Steinbrenner and his attorneys "were bargaining for changes in phrasing here and there."

They also were bargaining for an opportunity to preserve Steinbrenner's hopes of keeping control of the Yankees within his family and maintaining his considerable standing within the U.S. Olympic community.

Thus, Steinbrenner agreed to resign as general partner by Aug. 20 and Vincent approved the appointment of Hank Steinbrenner as the new general partner.

Steinbrenner's penalty is not appealable. In addition, he is not necessarily entitled to apply for reinstatement.

"Nothing is absolute," the source said. Steinbrenner "could" seek reinstatement, but "as far as Fay is concerned, it's permanent."

Steinbrenner said yesterday that he is "satisfied" with the arrangement.

Kaufman explained why.

"You have to remember," the attorney said last night, "his sons were approved {to be appointed as general partner}. His family keeps ownership of the team. He's certainly a factor in financial decisions. And the word 'suspension' does not appear in the settlement."

Kaufman said the last factor could be considered "significant." He said the Olympics are "very important" to Steinbrenner.

"I have no desire to return as general partner," Steinbrenner said in a statement released by the Yankees. "That will rest with my sons. I have other endeavors which I plan to devote most of my available time to now, which are very important to me."

Whether working for the USOC will be one of those endeavors is an issue that may be decided by its executive committee Aug. 22 in Colorado Springs. Steinbrenner has been involved with the organization since 1985.

He was the chairman of the Olympic Overview Commission, a group formed at the 1988 Winter Games and charged with evaluating and analyzing the U.S. Olympic movement.

The implementation of its recommendations resulted in the current organization of the USOC and helped Steinbrenner gain election as one of the USOC's three vice presidents. His four-year term does not expire until February 1993, but Helmick cast doubt on whether he would complete it.

"When the head of a major sport in the United States says an individual has operated contrary to the best interests of that sport, obviously we must be very concerned," Helmick said.

As for Hank Steinbrenner's ability to receive the necessary approval from other major league owners, his father's counterparts seem to know little about him, and those who could be reached said they still were beginning to learn about the situation.

"This is the first I've heard about" Hank Steinbrenner being approved by Vincent as the candidate, said Oakland Athletics Chief Operating Officer Wally Haas. "It's hard for me to comment."

Said Detroit Tigers Chief Executive Officer Jim Campbell: "I've met Hank on a couple of occasions at meetings, but other than that I know nothing. I don't know him personally."

There is some thought that George Steinbrenner's lack of popularity with some owners could hurt his son's chances of assuming control. But there also is some thought that Vincent's approval of Hank Steinbrenner will serve as a cue.

"Certainly, I respect Fay's judgment a great deal," Haas said.

Hank Steinbrenner, 33, has devoted most of his energies to the family's horse-breeding business in Ocala, Fla. In the mid 1980s, however, he spent about a year being schooled in the baseball side of the Yankees operation. He attended organizational meetings, and reportedly played a significant role in his father's decision to retain Lou Piniella as manager for the 1987 season.

"He's a very sharp guy," said Robert Banker, a Tampa attorney who has represented Steinbrenner for about seven years. "He's very quiet and reserved. To me, he's very intellectual, very organized. Just a real neat kid. It's hard not to like Hank. Quite frankly, I don't think there's anybody who's gotten to know Hank who doesn't like him.

"I don't think you could say he is the opposite of his father," Banker said. "But they are opposite in some respects. Whereas George tends to be far more volatile, vocal and outspoken, Hank is more reserved. But that's not to say Hank isn't strong-willed."

Banker said: "I don't think it was any secret at all" that George Steinbrenner, who turned 60 on July 4, had been planning to gradually hand control of the Yankees to Hank.

"He's been trying to do this for quite a while," said William Fugazy, a New York businessman who is close to Steinbrenner. "He brought up young Hank several years ago, and he's very much interested in American Ship Building and the Olympics. He loves the Olympics. That's his pride and joy."

But so are the Yankees. Yet, he has given them up permanently.

"He's a fighter," Fugazy said. "He'd never lay down unless he felt it was for the good of everybody."

Fugazy said he spoke to Steinbrenner late Monday night, and Steinbrenner said: "Bill, I'm relieved."