These things are always fluid, but for now Yankees are out on Dunn. Checking into other alternatives.According to Joel Sherman, this is why:
He went on to say that these are the reasons that the Rays are apparently backing away from Dunn as well. (hat-tip to RAB)
The Yankees consider the current asking price steep and would only deliver that kind of package for a game-changing necessity, such as Cliff Lee, not for someone they consider a luxury, such as Dunn.
Plus, the Yankees were worried about giving up significant prospects and not being sure about Dunn as a DH. Dunn has spent his entire career in the NL, so he has never DH'ed regularly and has said repeatedly he does not want to be exclusively a DH. That combination made the Yankees wonder if he would adapt to the job, especially when you add on a new league, a new city, and a level of expectation Dunn has never experienced with the Reds, Diamondbacks or Nationals.