Because you pay a guy for what you think he will do for you this season, not what he has done for the team the last 10 years.
I understand that reasoning about the pay cut, but baseball is a different beast. In the business world, the older you get and the more experience you have, the more value you have. You are paid for your past success and experience. This is true until you retire. Not so in baseball. You are paid based on what you are projected to do, based on your past. There comes a time when your skills decline, and your projections for the future are lowered. It's a bell curve instead of a steady increase.
Besides, look at all of the other veteran guys who are taking a pay cut this year. It's not like Andy is in a unique situation here. The Yankees gave him a more than fair offer based on the market this offseason.