Right-hander Mike Witt, 30, and the New York Yankees agreed yesterday to a three-year contract worth approximately $8 million.

He was acquired May 11 with pitcher Rich Monteleone in a trade that sent outfielder Dave Winfield to the Angels. He was 5-6 with a 4.47 ERA in 16 starts with the Yankees and 5-9 with a 4.40 ERA overall.

In another development, the Baltimore Orioles and left-handed pitcher Jeff Ballard, 27, agreed to a one-year contract. He was 2-11 with a 4.93 ERA in 44 games in 1990. He made 17 starts and went nearly four months between victories.

Witt was eligible to sign with any team through Jan. 29 as part of new look free agency granted to 15 players in last month's collusion settlement. The Toronto Blue Jays were interested, but the Yankees convinced him to stay in New York. The contract includes an option for 1994.

"The Yankees have a storied reputation," said Witt's agent, Nick Lampros. "They appear to be trying to put their ballclub in the right order."

Witt and the Yankees agreed to the main points in the contract last weekend, but it wasn't finalized until yesterday.

"We hadn't seen the whole thing on paper until today," Lampros said.

Before coming to the Yankees, Witt and Mark Langston pitched the first of the majors' nine no-hitters last season.

Witt, whose 10-year major league record is 114-113, will join Scott Sanderson in the Yankees' rotation. Sanderson was acquired from the Athletics on New Year's Eve.

Doug Jones, 33, signed for about $2 million a year, making him the Cleveland Indians' highest-paid player. He had 43 saves last season.