MLB.com's Jon Morosi confirmed the report that was initially released by Max Wildstein of Gotham Sports Network. Morosi later reported that the San Diego Padres are also having "ongoing discussions" about a Gray trade.
Gray spent parts of the past two seasons with the Yanks after they acquired him in a trade with the Oakland Athletics in 2017.
The 29-year-old righty fell out of favor last season and was eventually replaced in the starting rotation. In 30 appearances (23 starts), Gray went 11-9 with a 4.90 ERA, 1.50 WHIP and 123 strikeouts over 130.1 innings.
He was somewhat unlucky, as evidenced by his 4.17 FIP (courtesy of Baseball Reference), but he was a far cry from the ace the Yankees thought they were getting when they traded for him in 2017. New York gave up multiple high-level prospects in Dustin Fowler, Jorge Mateo and James Kaprielian to acquire the one-time All-Star.
In 11 starts with the Yankees in 2017, Gray went 4-7 with a 3.72 ERA, which generated hope for 2018 and beyond.
Over his first three MLB seasons with the A's, Gray had the makings of a top-flight starter. He was especially good in 2015 when he went 14-7 with a 2.73 ERA and finished third in the American League Cy Young voting.
Gray had fleeting moments of greatness with New York, but he couldn't figure out how to pitch in Yankee Stadium. Last season, he went 4-4 with a 6.98 ERA and 1.90 WHIP in 15 home appearances, and in 15 road outings, he was 7-5 with a 3.17 ERA and 1.16 WHIP.
Those splits suggest Gray could still be a valuable starter with a change of scenery.
Milwaukee makes sense, considering it reached the National League Championship Series in spite of a weak starting rotation.
The Brewers could receive a significant boost if Jimmy Nelson returns to full health in 2019 after he missed all of 2018 with a shoulder injury, but there are major question marks elsewhere in the rotation, as Jhoulys Chacin and Chase Anderson are the top options.
Milwaukee doesn't have an ace, and while Gray's recent performances suggest he isn't one either, he has an impressive pre-Yankees resume that could make him worth a gamble.
Unlike the Brewers, the Padres have not been in contention in recent years, and they haven't reached the playoffs since 2006.
San Diego has built up its farm system during a down period, however, and Gray could potentially head a largely unproven starting rotation.
The Yankees no longer need Gray after they acquired James Paxton in a trade with the Seattle Mariners and due to the fact that they are also pursuing free-agent starters Patrick Corbin, Nathan Eovaldi, J.A. Happ and Lance Lynn, per MLB.com's Mark Feinsand.
Provided the asking price isn't too high, there isn't a ton of risk involved for the Brew Crew or Padres if they trade for Gray since he can become a free agent in 2020.