Article: Understanding the Deferred Money in Alex Bregman’s Contract

[Davy Andrews]

What was widely reported as a deal worth $120 million is actually worth much less, but the intricacies help explain why it was still appealing to Bregman.

Now that Alex Bregman has officially signed his deal and taken his first batting practice session as a member of the Red Sox, let’s make sure we understand the terms of his contract, because they matter quite a bit. Officially, the deal is for three years and $120 million, with opt-outs after the 2025 and 2026 seasons. More recently, we’ve learned that the contract involved a signing bonus and deferrals, which change the value quite a bit. Let’s start here: we shouldn’t think of this as a $120-million deal; we should think of it as a $95.1-million deal.

The Boston Globe’s Alex Speier broke down the final numbers on Saturday: Bregman gets a $5 million signing bonus, and makes $35 million in 2025, then $40 million in both 2026 and 2027. In all three seasons, $20 million is deferred. Each year, the Red Sox will set that deferred money aside for ten years. After those 10 years, they will start paying Bregman the money over a period of another 10 years. So in 2035, Bregman will get $2 million that were set aside in 2015. In 2026, he will get $4 million: $2 million that were set aside in 2015, and $2 million that were set aside in 2016, and so on. The table below shows how many millions Bregman will get paid each season, assuming he stays for the entire three years.

Year	Bonus	Salary	'25 Deferral	'26 Deferral	'27 Deferral	Total
2025	5	15	-	-	-	20
2026	-	20	-	-	-	20
2027	-	20	-	-	-	20
2028	-	-	-	-	-	0
2029	-	-	-	-	-	0
2030	-	-	-	-	-	0
2031	-	-	-	-	-	0
2032	-	-	-	-	-	0
2033	-	-	-	-	-	0
2034	-	-	-	-	-	0
2035	-	-	2	-	-	2
2036	-	-	2	2		4
2037	-	-	2	2	2	6
2038	-	-	2	2	2	6
2039	-	-	2	2	2	6
2040	-	-	2	2	2	6
2041	-	-	2	2	2	6
2042	-	-	2	2	2	6
2043	-	-	2	2	2	6
2044	-	-	2	2	2	6
2045	-	-	-	2	2	4
2046	-	-	-	-	2	2
Total	5	55	20	20	20	120

If this all strikes you as absurd, you’re not wrong. It’s patently absurd. However, that doesn’t mean there’s no logic behind it. For starters, the opt-outs make the deal more valuable for Bregman. He entered free agency coming off a (relatively) down season, and he clearly thinks it’s wise to bet on himself. If he puts up another MVP-caliber campaign in 2025 or 2026, he can opt out and look for the long-term contract that he wanted all along. Essentially, this deal gives Bregman the chance to make more money later, and that chance has value.

Because future money is worth less than present-day money – a concept I explored at length over at Baseball Prospectus last season – the deferrals also lower the value of Bregman’s contract. For competitive balance tax purposes, Bregman’s deal is worth $31.7 million a year, rather than $40 million. That’s why we should think of this as a $95.1-million contract.

Not at all coincidentally, that $31.7-million average annual value puts Bregman just above Rafael Devers’ $31.35 mark. So the deferrals reduce the value of the contract, but only just enough to keep Bregman as the highest-paid third baseman on the team.

Over at North Side Baseball, Matthew Trueblood compared what the Cubs and Red Sox were offering Bregman. According to which report you believe, the Cubs offered Bregman four years and either $115 or $120, with no deferred money, and opt-outs after the 2026 and 2027 seasons. That means that in terms of average annual value, their offer was very, very close to Boston’s, because it didn’t involve any deferred money. If the number really was $120 million, then the AAV is $30 million. The Cubs’ offer also included an extra year, but it didn’t include an opt-out after the first year. These were two very similar deals, from two historic franchises that are building to compete in 2025. Clearly, that flexibility, along with the knowledge that his AAV is higher than Devers’, mattered quite a bit to Bregman and to agent Scott Boras.

Bregman’s deal is very similar to the deal Carlos Correa signed with the Twins in 2022, after concerns about the health of his ankle scuttled deals with the Giants and Mets. Correa signed in Minnesota for three years and $105.3 million, with opt-outs after each season. After putting up 4.6 fWAR in 2022, Correa opted out, then signed a six-year, $200-milion deal (with club options over the following four years) to remain in Minnesota.

We haven’t even gotten into the luxury tax considerations, but it’s clear that Bregman had a hard decision to make. The deal the Red Sox offered him included some obvious advantages and allowed him to hit in a friendlier ballpark, but it also landed him on a team whose franchise player is a third baseman. Maybe Bregman’s preference for an opt-out is stronger than we thought, and he’s unlikely to stick around unless he has a particularly down year. Maybe he really believes the Red Sox when they say they’re building to compete, and he wants to be around a winner.

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