New York has confirmed making a six-year, $140 million contract offer to the free agent this weekend.
"It sounds like they're overbidding," Melvin said in an interview with the Milwaukee Journal Sentinel. "If the speculation is true that we've offered CC $100 million, why would you offer $140 million? Why wouldn't you offer $110 million?"
Melvin added he would ask Sabathia's representatives by the middle of next week to tell him where the Brewers are in the bidding and if further negotiations make sense.
After a trade deadline deal in July, Sabathia, 28, the 2007 American League Cy Young award-winner, compiled an 11-2 record in 17 Milwaukee starts with a 1.65 earned-run average.
Yankees Co-Chairman Hal Steinbrenner also has confirmed New York's interest in free-agent right-handers A.J. Burnett of Toronto and San Diego's Jake Peavy.