I think Corrye summed it up best when he texted: "So apparently Fernando Valenzuela wasn't available..." He has a point. After all, what could the Yankees possibly want from a 37 year old pitcher that's produced a 5.02 FIP and 2.3 WAR in 257 innings over the past five seasons? What possible value could they get from a washed up pitcher?
In reality, they're probably not expecting a whole lot. As it currently stands, the Yankees have a pretty shallow rotation with Ivan Nova and Sergio Mitre filling the back end. Signing Colon is a move to add depth. In all likelihood, they'll stash him in AAA until someone either gets hurt, or proves to be ineffective. Considering Colon's low salary (maxes out at $900K if he makes the club out of Spring Training), he poses absolutely no risk to the Yankees. If he doesn't work out for the Yankees, it's no big deal. $900K is a drop in the bucket for a team whose payroll typically tops $200M. If he does provide some value, it's a huge win for the Yankees. Granted, that scenario is pretty unlikely, but it's still possible.
When you look at the signing from all of the angles, the Yankees really can't lose.