Everybody thinks Jeter's gonna get like 20 million a year, which I suppose isn't totally a bat shit crazy amount to pay a guy who's really in the decline phase of his career. If he gets something like 3/60 he's overpaid but it probably doesn't do serious damage to the Yankee payroll.
But the free agent market isn't going to justify it. No one else is gonna come close to offering him that kind of money, and even if the Red Sox came along and offered a little more money, in the long run that would diminish Jeter's prospects of being set for life with endorsements and such. Staying in NY is probably worth a couple of million a year for a long, long time, regardless of what the Yankees contract looks like.
On the other hand, the Yankees probably want to get this deal done quickly so they can focus on making some needed acquisitions for their starting rotation.
I know what you're asking yourself and the answer is yes. I have a nick name for my penis. Its called the Octagon, but I also nick named my testes - my left one is James Westfall and my right one is Doctor Kenneth Noisewater.