Getting a handle on the Milwaukee Brewers’ deferred money situation

The Milwaukee Brewers took some major steps towards paring down their roster to 25 men over the weekend, including getting their starting five in the rotation set for the start of the regular season. We already knew that Chase Anderson, Zach Davies, and Jhoulys Chacin were penciled in, but the org has officially settled on Brent Suter and Brandon Woodruff as the final two hurlers to fill out the group, at least to begin the year. Suter will make the start in the third game of the season against San Diego, while Woodruff will work out of the bullpen until a fifth starter is needed in the Cubs series during the second week of the season.

Much of the offseason was spent discussing that starting rotation and the possible pitchers that would be a part of it, both in-house and those available on the open market. Rumors swirled throughout the winter connecting the team to the likes of Jake Arrieta, Yu Darvish, and Alex Cobb, but in the end the biggest outlay made by Slingin’ David Stearns and company was the two-year deal given to Chacin.

Addressing the disappointment of many fans regarding the lack of pitching additions, Stearns opened up to Tom Haudricourt of the Journal-Sentinel over the weekend and discussed how the offseason went:

“We had conversations with a variety of agents and players, stretching up and down the entirety of the free-agent gamut. Some of them we made offers to, some of them we didn’t. That’s all normal practice throughout the course of the off-season. We thought we had a chance at other guys as well but it didn’t come through...There’s always some misinformed speculation out there. That’s part of it. I did think when it came to us, there was a greater ratio of that this year than I’ve seen in past off-seasons.”

Given that the Brewers play in one of the smallest markets in professional sports, payroll restrictions naturally came up as one of the reasons as to why the Brewers didn’t land anyone more notable. The Brewers added some significant commitments this winter, to be sure, but as things stand now the Opening Day payroll projects to a shade below $90 mil. But Haudricourt makes note of something that may not have received much consideration during the process - the deferred payments that Milwaukee is on the hook for.

But the Brewers also have deferred payments on the books this year to former players Aramis Ramirez, Kyle Lohse and Matt Garza. Factoring in those commitments as well as funds allocated for bonuses, minor-league call-ups, etc., the club considers its payroll to be above $100 million, a stretch in their market.

I’m guilty of not really giving much thought to these deferrals when considering possible transactions for the Brewers, so I figured it would be worth diving into to see how much money the team has tied up. And honestly, it doesn’t seem like these payments should be holding the Brewers back from doing much of anything.

As mentioned, the Brewers built deferrals into the contracts of former players Aramis Ramirez, Kyle Lohse, and Matt Garza. Ramirez signed a three-year, $36 mil contract with Milwaukee back before the 2012 season, which ended up turning into a four-year deal after the Brewers exercised their team option over Ramirez for 2015. According to the terms of the agreement, Ramirez drew a $14 mil salary in 2014, but $6 mil of that was deferred to be paid out in equal installments of $3 mil. The first of those payments was made on December 15, 2017 and the final one will be paid on December 15, 2018.

Lohse inked a three-year, $33 mil deal with Milwaukee prior to the start of the 2013 season that expired following the 2015 season. Per the language of the contract, $7 mil of Lohse’s $11 mil salary in 2013 was deferred, to be paid in equal installments from 2016-2018. Each payment comes out to roughly $2.33 mil, and the Brewers now only owe Lohse one more portion in 2018.

Finally, Matt Garza joined the Brewers on a four-year, $50 mil pact that expired following the end of last season. Garza’s deal paid him a $12.5 mil salary for each season he was in Milwaukee, but with $2 mil deferred each season to be paid in four equal installments from 2018-2021. So Milwaukee’s first payout will come later this year, on December 15, 2018 like Ramirez’s.

Added all together, the Brewers owe that trio of players about $7.33 mil in deferred payments later on in the calendar year of 2018. That’s not nothing, but it is mitigated in part by deferrals that are built into the contracts of a couple of current players. Ryan Braun will draw a $19 mil salary in 2018, however $4 mil of that is deferred as a part of the extension he signed way back in 2011. Braun has a total of $18 mil in deferrals built in over the life of his contract that will be paid out in nine equal installments every July 1st from 2022-2031. Lorenzo Cain also received a deferred $5 mil signing bonus as a part of the five-year contract he signed with the Brewers, and he’ll receive a $1 mil payout from Milwaukee each year from 2023-2027.

So as far as deferred money goes, the $7.33 mil they owe is mostly offset by the $5 mil of deferred compensation that Ryan Braun and Lorenzo Cain won’t receive until much later. That would add a net of only about $2.33 mil to Milwaukee’s payroll figure for the upcoming season. So even factoring in potential bonuses and minor league call-ups, I have a hard time believing that the club’s internal payroll projection is in excess of $100 mil, as is posited in the Journal-Sentinel article.

That’s not to say that the club’s resources may be limited by other expenditures - the Miller Park concession upgrades, the purchase of the Carolina Mudcats, the Maryvale Spring Training facility renovations, etc. But the main point of this article is to remind myself and everyone else that now - and going forward - the Brewers are on the hook for a non-negligible amount of coin to former players.

Contract information courtesy of Baseball Prospectus