Just when you thought it couldn’t get any better, here we are.
Not only did the Cubs make a gigantic splash in free agency last night, signing third baseman Alex Bregman to a (nominal) five-year, $175 million deal exactly when they needed to, but the deal also comes with upwards of $70 million deferred per Ken Rosenthal.
That’s a good thing and a good sign for a number of reasons. Let’s discuss.
Alex Bregman Contract Deferrals
We don’t know the full details of the deferrals yet (namely, how far out they deferred these dollars (and, thus, how much less this contract will cost in present value)), but $70 million is a healthy chunk of change to push out to the future.
That will reduce the total value of the contract dramatically, which will (1) reduce the dollars paid out by the Cubs over the five-year term of his contract (which should give them more financial flexibility, relatively speaking), and, more importantly, (2) reduce the luxury tax hit from the initially calculated $35M AAV
To put that another way: When we thought this deal was a straight 5/$175M, the luxury tax hit was to be calculated at $35 million per year, which brought the Cubs up and over the first tier of the Competitive Balance Tax threshold ($244M). But because the Cubs are deferring so much money, the actual hit will come down and potentially keep the Cubs from going over the tax (for now).
Up According to Ken Rosenthal, the expectation is that with deferrals, Alex Bregman’s luxury tax hit will fall somewhere in the range of $30-$31M per year. So, roughly speaking, you can think about this deal as something close to five years and $150 million, which is right around where he was projected.
After re-signing Shota Imanaga, trading for Edward Cabrera, improving their bench (by way of Matt Shaw and also free agent Tyler Austin), and spending $30 million on their bullpen, the Cubs don’t have a lot of obvious needs heading into 2026. They also have a ton of money coming off the books after this season. But they’ll likely still appreciate the extra flexibility for in-season maneuvers.
Frankly, I was fine with this deal as five years and $175M. I thought it was an overpay, sure, but a necessary one the Cubs could weather given their needs, expected competitiveness, and the money coming off the books after this season. But now? It just feels like a little bonus. The deal was smaller than we thought. Great.
Now, here’s the other thing: Tom Ricketts, Jed Hoyer, and Carter Hawkins are finally sitting at the big boy table, engaging in the MODERN version of free agency, which, for better or worse, includes deferrals as a selling point.
Make no mistake, deferrals like this are a benefit to exactly two parties: The teams, who get to pay less in present value than the contract suggests, and the agents, who get to pretend like they scored a MASSIVE win for their player, when in reality, it’s meaningfully less.
But until now, for whatever reason, the Cubs were categorically against deferrals, routinely refusing to push almost any debt out into the future. It was a frustrating position because it was so difficult to understand why they’d be against something that is of value to them. But this time, they did what they needed to do to get it done. I’m proud of them.
The Cubs also included a no-trade clause in their deal for Alex Bregman, which the Red Sox were reportedly unwilling to do (they were also reportedly at $160M over five years, also with deferrals).
There is so much more to be said about this signing – and we’ll get into a lot of it today – but for now, I wanted you to see that news. I’ll update this post when the full deferral details are released.
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