Jason Giambi belted 41 home runs in each of his first two seasons with the Yankees before dipping to 12 in 2004. David Bergman/SI

Sports Illustrated senior baseball writer Tom Verducci on Thursday's San Francisco Chronicle report that Jason Giambi admitted using steroids during grand jury testimony.

SI.com: In light of this news, will the Yankees try to void the remaining four years and nearly $70 million on Giambi's contract?

Verducci: They'll definitely look into the possibility of voiding the contract. The Yankees have had this in mind for a long time, but I seriously doubt whether they have legal ground to stand on. The collective bargaining agreement between players and owners supercedes whatever the Yankees might find in between the lines of his contract. In 2003, the most recent year in which Giambi admitted to using steroids in the testimony, there was no penalty phase under the CBA. The Yankees will try but it will be an uphill climb the size of Mt. Everest.

SI.com: What kind of production can we expect from Giambi when he returns to the field?

Verducci: As far as Giambi being an MVP-caliber impact player, we'll never see that again. Obviously he has other health-related issues to consider, too. At this point Giambi will be subject to random testing for the rest of his career. I don't think he will be playing with performance-enhancing steroids in his body again. He'll go back to being the player the Oakland A's signed and developed, a decent hitter but certainly not an impact player.

SI.com: What will next season be like for Giambi?

Verducci: It's going to be an extremely tough season for him. Physically, it will be very challenging for him to get back into baseball shape just to begin with. Mentally, this controversy will be an incredible burden for him to carry around, and he's not someone who is comfortable dealing with these kind of large issues. The pressure will be constant and will be cruel and at the same time he's going to have to produce for the Yankees at the high level they are paying him to.

SI.com: What other options are the Yankees considering at first base?

Verducci: The Yankees have Tino Martinez on their radar but that's something that can be done in January. They still have interest in bringing John Olerud back. They'll find another first baseman. It might not be a big name like Richie Sexson, but I wouldn't be surprised if they sign Tino Martinez in January.

SI.com: Are the Yankees the big losers in this probe, considering two of their big names -- Gary Sheffield and Giambi -- have publicly admitted to using steroids?

Verducci: You could look at it that way, but I think the players are the big losers from this, whether they are clean or dirty, not any one team. A Red Sox fan can't say, "Ha ha" to the Yankees over this.

SI.com: Do the consistent news leaks damage the integrity of the government's BALCO investigation?

Verducci: When you're dealing with something this large in scope, when it involves pro athletes familiar to the general public, the war will be fought on a couple of fronts. The courtroom is one, and the courtroom of public opinion is the other. The people doing the investigating want to get their side out to the public before it goes to trial. To me, whether the information was leaked or not is inconsequential. At some points we're going to hear all the facts of the case, so whether some of it comes out now or later doesn't matter.

SI.com: Now that this information so damaging to Giambi has leaked, can we expect the same to happen to other big names in the investigation, perhaps even Barry Bonds?

Verducci: Nothing would surprise me at least in terms of the names that have already been mentioned. I've always had the sense that these investigators are sitting on a mountain of factual evidence and it's only a matter of time before it's presented.

SI.com: Ultimately, will this probe lead to a tougher drug testing policy for Major League Baseball?

Verducci: I thought when the BALCO investigation first broke that it would lead to a stronger drug test policy, but here we are a year later and it hasn't. The fault for that lies squarely with the players' association. This news should lead to a stricter, tougher drug testing policy but I'll believe that when I see it.

Sports Illustrated senior writer Tom Verducci covers baseball for the magazine and is a regular contributor to SI.com.