"It was what I set out in the spring to do," Hughes said manager Joe Girardi announced the decision. "I grew up a starter in high school, minor leagues, even my first couple partial seasons in the big leagues. It was something that I really wanted and I feel like I'm ready for the challenge and ready for the season that lies ahead. "
Girardi said Chamberlain will be given an opportunity to pitch out of the bullpen and is in the mix for the eighth-inning setup role for closer Mariano Rivera.
Chamberlain was at the Yankees' complex about an hour before Girardi announced the winner and said "You go with the flow. That's what I've done."
Hughes and Chamberlain spoke briefly at Steinbrenner Field.
"He just said 'congrats,'" Hughes said. "I think we all trust in the front office and the coaching staff to make the right decisions. We just get paid to go out and throw the ball. There's no bitterness or anything like that. We're all pulling for the same goal, to do what we did last year. The roles might be switched but we're pulling for each other."
Hughes made seven starts at the beginning of last season, then was moved to the bullpen after Chien-Ming Wang got hurt. Chamberlain was in the rotation during the regular season, then was shifted in the postseason to the relief role, which appeared to suit him better.
Hughes might be limited to around 170 innings this season.
"That is the next thing we will iron out," Girardi said. "We'll probably try to do that in the next few days, exactly how we'll attack it. You learn from last year, in a sense, but every guy's different. Phil Hughes is different than Joba.
"I felt like everyone had been given an equal opportunity," Hughes said.
Gaudin, who turned 27 on Wednesday, will receive $725,410 in termination pay rather than the non-guaranteed $2.95 million salary he and the team agreed to in January to avoid salary arbitration.
"I'm disappointed. A great team to be with," Gaudin said. "I enjoyed every minute with these guys. I'm sure I'll land somewhere on my feet."
Cashman said sending Gaudin to Triple-A was not an option because of his salary.
"It'd be nice to have insurance like that, but it's not realistic," Cashman said.
New York acquired Gaudin from San Diego in August for cash, and he went 2-0 with a 3.43 ERA in six starts and five relief appearances for the Yankees last season. He was on the roster for all three rounds of the postseason but appeared in just one game, a one-inning relief appearance against the Los Angeles Angels in the AL championship series.
Also, Alex Rodriguez declined comment for the second straight day on his pending meeting with federal investigators regarding his possible connection to a Canadian physician.
The Yankees third baseman is scheduled to meet with officials Friday in Buffalo, N.Y.
"Felt normal, just my location was bad," said Sabathia, who threw 88 pitches. "I have one more start to try and fine tune little things and be ready for Boston."
Halladay gave up two runs and seven hits in seven innings. Jorge Posada, who caught Sabathia, had two hits in three at-bats.