David Cone will stay with the Yankees after agreeing to a one-year deal for approximately $12 million with the World Series champions, a source close to the negotiations said yesterday.

Cone, who was seeking a two-year contract, agreed to the deal--pending a physical--before a deadline Tuesday. The Yankees had no comment and calls to Cone's agent, Steve Fehr, were not immediately returned.

A clause in Cone's expired contract gave the 36-year-old right-hander the right to prohibit the team from offering him salary arbitration, according to baseball sources. If Cone had exercised that right and didn't sign with the Yankees by Tuesday, New York would have been unable to re-sign him before May 1.

Cone said last week that other teams have contacted his agent, but that he wanted to deal with the Yankees first. The Mets, Indians and Orioles were thought to be interested, but it is unclear if any of them were willing to offer two years.

Cone had said his preference was to finish his career with the Yankees. He has pitched for them the last 4 1/2 seasons.

Cone earned $9.5 million last season, going 12-9 with 3.44 ERA, the second-best in the AL. He was 9-4 with a 2.86 ERA at the all-star break, but in the second half was 3-5 with a 4.28 ERA.