UPDATE: Reports out of Los Angeles say the Dodgers are out of the Ryan Dempster talks. Buster Olney says Dempster is going to the Rangers

A source confirmed to ESPN New York that the Yankees and Cubs have had discussions about Ryan Dempster. Dempster, as a 10-5 player, has the ability to block any deal. Dempster told ESPN Chicago's Bruce Levine that he would allow a trade to go through to the Yankees.

The same source with knowledge of the Yankees' thinking still believes that Dempster will end up with the Dodgers.

"We'll see," the source added.

If the Yankees were to make a trade for Dempster, they'd probably demand money from the Cubs to encourage them to give up a top prospect. Dempster is 5-5 with a 2.25 ERA. Although he has tremendous numbers this season in the NL Central, it is unknown how he would do pitching in the AL East or even if he would be used before Hiroki Kuroda, Ivan Nova or Phil Hughes in a potential postseason rotation. If the Yankees were to make a trade for Dempster, it might indicate that they are concerned about whether Andy Pettitte will return.

Pettitte had a slight setback last week in his recovery from his fractured fibula, but the Yankees insisted it is not a real issue in his plan to return next month.

ESPN's Jayson Stark has reported that the Yankees have used assistant GM Jim Hendry to recruit Dempster to New York. For this to happen, Yankees GM Brian Cashman would have to receive permission from his Cubs President Theo Epstein to have a Yankee official contact a player on another team. As Cubs GM, Hendry negotiated Dempster's contract, which calls for him to make $14 million in this his final year of the deal.

Cashman could also be doing a favor for his buddy, Epstein. Dempster's first choice is to go to Los Angeles. Cashman could be helping to drive up the price for Epstein.