The New York Yankees are reluctant to meet the contract demands of Andy Pettitte and the free-agent pitcher doesn't want to sign on the club's terms, owner Hal Steinbrenner said.

"They were not happy with our offer, we were not happy with what they wanted," Steinbrenner told reporters at Yankee Stadium today. "There's still dialogue going on."

Steinbrenner said General Manager Brian Cashman spoke with Pettitte in late December. He didn't say if the club's $10 million offer for Pettitte to return this season was still available or if it had been withdrawn. The New York Times reported today that the left-hander rejected the Yankees' proposal, which would pay him $6 million less than last season.

Pettitte's agent Randy Hendricks didn't immediately respond to an e-mail for comment.

Pettitte went 14-14 with a 4.54 earned run average for the Yankees in 2008. The 36-year-old started his 14-year career in New York and returned to the franchise in 2007 after a three- year stint with the Houston Astros.

New York has bolstered its starting rotation by signing former Cy Young Award winner CC Sabathia and A.J. Burnett to contracts last month worth $243.5 million.

Steinbrenner spoke today after introducing first baseman Mark Teixeira, who received an eight-year, $180 million contract from the Yankees.