Masahiro Tanaka to Yankees

— -- Masahiro Tanaka has decided to sign with the New York Yankees, his agent confirmed to ESPNNewYork.com.

Tanaka's deal with the Yankees is worth $155 million over seven years and includes an opt-out clause after the fourth year, his agent, Casey Close said in a text message. Close had a deadline of 5 p.m. ET on Friday to have a contract and physical completed with the ace pitcher's new team.

"We're going to do what we've got to do to win," Yankees co-chairman Hank Steinbrenner told The Associated Press in a telephone interview. "We had to make sure we had enough pitching to go together with our new lineup."

Tanaka, 25, went 24-0 with a 1.27 ERA in the Japanese League last season and is considered by many to be a top-of-the-rotation starter.

Under new rules set this offseason, the Yankees also owe a $20 million posting fee to the Rakuten Golden Eagles, Tanaka's team in Japan. The right-hander was still under contract with the Eagles for two more years.

Tanaka will join a revamped roster with the Yankees, who also have signed outfielder Jacoby Ellsbury, catcher Brian McCann and slugger Carlos Beltran to lucrative contracts this offseason. Those deals totaled $438 million.

New York, which missed the postseason for just the second time since 1995 this past year, added some much-needed talent to its rotation, which previously had been led by aging veterans CC Sabathia and Hiroki Kuroda.

Tanaka is 99-35 with a 2.30 ERA and 1,238 strikeouts in 175 games for Rakuten since 2007. He has 53 complete games, including 18 shutouts.

Of all the teams that were courting Tanaka -- the Los Angeles Dodgers, Chicago Cubs, Chicago White Sox, and Arizona Diamondbacks -- the Yankees had the largest offer to separate themselves from the field. The Yankees' expenditure ($175 million in salary and posting) is the largest ever for a free-agent pitcher.

His deal pushes the Yankees' payroll for purposes of the luxury tax over $203 million. Barring trades, there is little chance New York will get under the $189 million tax threshold.

Yankees managing general partner Hal Steinbrenner had been saying for two years that getting under the tax threshold in 2014 was a goal but wouldn't get in the way of fielding a contending team.

"There has been criticism of myself and my brother the last couple years that, gee, if our dad was still in charge, we'd be spending this and spending that and doing whatever it takes to win," Hank Steinbrenner said, referring to late Yankees owner George Steinbrenner.

"He didn't have revenue sharing, at least for most of his time," Hank Steinbrenner added. "That's what these people in the sports media don't seem to get. If it wasn't for revenue sharing, we'd have a payroll of $300 million a year if we wanted to. So we're doing this despite having to pay all that revenue sharing."

Tanaka receives the highest contract for an international free agent and the fifth-largest deal for a pitcher, trailing only those of the Los Angeles Dodgers' Clayton Kershaw ($215 million), Detroit's Justin Verlander ($180 million), Seattle's Felix Hernandez ($175 million) and Sabathia ($161 million under his original agreement with New York).

New York will be hoping Tanaka enjoys the same success that Japanese right-hander Yu Darvish has had with the Texas Rangers. Darvish, who agreed to a six-year, $60 million deal with the Rangers after the team won his negotiating rights with a $51.7 million posting bid, is 29-18 in two seasons with Texas, striking out 498 batters in 401 innings.

ESPN's Buster Olney, ESPNNewYork.com's Wallace Matthews and The Associated Press contributed to this report.