Cashman walked away from Santana deal because of money

From Bill Madden:

But it is more than just Cashman's belief in Hughes that suddenly put the Yankees in full retreat after Hank Steinbrenner had sounded the "Charge!" on Santana. Believe it or not, the final decision not to go through with a deal that was on the table - one that would have sacrificed Hughes, Melky Cabrera, 23-year-old Double-A righthander Jeff Marquez and 22-year-old A-ball third baseman Mitch Hilligoss - was based on money.

Once Andy Pettitte announced he was returning to the fold for $16 million, it meant the Yankees had committed $408.4 million this winter to retain six players. The acquisition of Santana would have meant tacking on another $125 million to that figure, and Cashman, who never wanted to do the Santana deal in the first place, blanched at the prospect of adding another $20 million to a payroll that was already on the cusp of $200 million, again. In this respect, the timing of Pettitte's decision to return - while initially seen as giving the Yankees additional leverage in their dealings with the Twins on Santana - actually gave Cashman the "out" he needed. (New York Daily News)

If money wasn't a factor, that trade seems like a steal for the Yankees. However, terrible free agent contracts from earlier this decade have proven to finally inhibit the Yankees' spending.

That said, I could see why Cashman does not want to trade Hughes either. Madden cites that Cashman's legacy will be the big three of young pitchers. Trading them instead of developing from within would show that Cashman does not have the power he sought within the organization.