Here is what I'd do.
1) Let Theo go to Cubs. I'd try and get Cashner or Colvin. Second probably being a pipe dream.
2) Find a way to get rid of Lackey. Either by eating his contract or trading and eating some money. This is a must for me. If I was JH their is no way he is here next season on the anniversary year.
3) Re-up Paps. If he declines which I think he will, id go hard after Bell.
4) Let Papi walk. He had great year their is no doubt about it. But after the way the season blew up, I want guys here that want to fight every week and are proud to wear the jersey. Ortiz has been here long enough now that he should be a leader, not complaining about RBI's or telling the media he would like to play for the Yanks.
5) Trade Beckett and Youk. Probably will be scathed for this but after the way the season finished and with what we are hearing Beckett clearly does not want to win. I understand he is probably our best starter but I think his trade value is high enough we could get something decent for him. As I said I want players here who respect the jersey. Youk is done for mine. Yes great hitter but he is breaking down consistenly now and I think we could get something for him.
6) Go after Josh Willingham to DH. He is fighter, i think he could bring something to the table. Cuddyer is another.
7) Depending on the money look at A-Ram at third base. If he wants something out of control then I'd move on. Kelly Johnson could be a stop gap though I doubt that happens.
8) Go after Gio Gonzalez. I reckon we could pry him from the A's with the right deal. If this fails I'd seriously consider Bard for the rotation. Aceves to SU.
9) Mark Buerhle is someone I'd consider signing. His numbers at Fenway aren't great but I think he could be an innings eater.
10) Bullpen is next. Guys like J Sanchez, Rich Harden and if he can stay out of trouble although I doubt it.. Scott Olsen. It's a huge gamble I know. I've had a few to be fair.
I know some of this is way out there but hey we are all entitled to an opinion...pipedream or not.