Upon signing a multimillion-dollar contract with the Boston Red Sox, it was revealed that a significant portion of Alex Bregman‘s salary would be paid on a deferred basis. The initial deal, before factoring in deferrals, is for three years and $120 million, with opt-out clauses for the MLB star.
Although the Red Sox reportedly offered Bregman $10 million more per year than any other competing team, the present value of their offer is approximately $30 million per year due to the deferrals. While deferred salaries are not new in baseball, their usage has been growing significantly in recent years.
According to Bob Nightengale of USA Today, half of Bregman’s $40 million annual salary will be deferred. “Alex Bregman will have $20 million of his $40 million annual salary deferred each year,” he reported via “X” (formerly Twitter).
A similar approach was taken with Shohei Ohtani’s historic deal, which included a massive deferral component that lowered its present value from $700 million to approximately $540 million. Bregman’s contract is 50% deferred, while Ohtani’s stands at an unprecedented 97%.
Impact of deferrals: Benefits for MLB teams and players
Salary deferrals provide advantages for both teams and players. For teams, they help lower the luxury tax bill and allow them to sign top-tier talent without limiting future spending flexibility. In the Red Sox’s case, this strategy enabled them to secure Bregman while maintaining financial flexibility to strengthen the roster further.
Alex Bregman #2 reacts after hitting a two RBI double in the eighth inning against the Oakland Athletics at Minute Maid Park on May 13, 2024 in Houston, Texas. (Photo by Tim Warner/Getty Images)
For players, deferrals offer long-term financial security, while allowing stars to join competitive teams without sacrificing substantial earnings. This approach has become an increasingly attractive financial tool for MLB front offices.
see also
MLB News: Alex Bregman’s $120M Red Sox deal sets stage for key lineup adjustments
What’s next for Bregman?
Bregman is set to be officially introduced as a member of the Red Sox during a press conference this Sunday morning. With all eyes on Boston, the event is expected to generate major buzz among fans and around MLB.
