Right-hander Seth Lugo and the Kansas City Royals are finalizing a two-year, $46 million contract extension, sources told ESPN, taking one of the best potential trade candidates off the market days before the Thursday deadline and reaffirming Kansas City's intentions to pursue a playoff spot in a wide-open American League.
The deal will pay Lugo $20 million a season plus a $3 million signing bonus and includes a vesting option for a third season for $20 million or a $17 million club option with a $3 million buyout, sources said.
Lugo, 35, finished second in AL Cy Young voting last season and has followed with a similarly excellent 2025, posting a 2.95 ERA over 113 innings. He was expected to decline a $15 million player option for 2026 and reach free agency, but Lugo expressed a desire to stay in Kansas City and negotiated the extension to remain in one of baseball's top rotations.
The emergence of Lugo was a key to Kansas City's surprising postseason run in 2024. A June swoon in which the Royals went 8-18 this year looked to resign them to offloading potential free agents at the deadline, but they have gone 13-8 in July and, at 52-54, are four games behind Seattle and Texas for the final wild-card spot in the AL.
Kansas City indicated its intentions to push toward a playoff spot when it acquired outfielder Randal Grichuk from Arizona on Friday for reliever Andrew Hoffmann. The Royals will do so with a battered pitching staff. All-Star left-hander Kris Bubic hit the injured list with a rotator cuff strain on Sunday, while ace Cole Ragans is likewise on the shelf with a shoulder injury, though he has started throwing and could soon progress to bullpen sessions. Right-hander Michael Lorenzen is nearing a return from an oblique strain and left-handed reliever Daniel Lynch IV is on a rehabilitation assignment, offering hope that the Royals' pitching staff could be at full strength for the stretch run.
Lugo will remain at the heart of it. After making his debut with the New York Mets at age 26, Lugo emerged as a solid reliever over his five years with the team. He signed with San Diego in 2023 and transitioned to the rotation, going 8-7 with a 3.57 ERA and impressing Kansas City enough to warrant a three-year, $45 million contract.
With the widest array of pitches in baseball -- Lugo throws two types of fastballs, three sliders, two curveballs, a changeup, a splitter and a cutter -- he threw a career-high 206⅔ innings in his first season with the Royals, posting a 3.00 ERA.
While Lugo's peripheral numbers this year have suggested he's in line for a regression, his ERA ranks 10th in the AL and he has stabilized a staff that, when healthy, is among the best in the major leagues with Lugo, Ragans, Bubic, Lorenzen, Michael Wacha and rookie Noah Cameron.
