Seth Lugo has gone from a potential trade candidate to rotation cornerstone, as the right-hander and the Royals are in the final stages of negotiating a new contract extension. The new deal is a two-year, $46MM pact that carries a club/vesting option for the 2028 campaign. The money breaks down as a $3MM signing bonus for Lugo, $20MM salaries in both 2026 and 2027, and then a $17MM club option for 2028 with a $3MM buyout. Should Lugo hit the vesting thresholds, that 2028 option will lock in another $20MM salary. Lugo is represented by the Ballengee Group.
Lugo had the ability to opt out of the final season of his previous three-year, $45MM contract, but instead of facing an opt-out decision this winter, the right-hander will be staying put in Kansas City. There wasn’t much doubt that Lugo (who turns 36 in November) was going to decline his player option and leave his final $15MM on the table in search of a larger and lengthier guarantee in free agency.
With the Royals also struggling to stay in the playoff race, there was some speculation that K.C. could look to move the veteran prior to Thursday’s deadline. However, the most recent reporting suggested that not only did the Royals want to keep Lugo beyond July 31, but the club wanted to work out a new contract to convince Lugo to forego his opt-out clause.
Assuming the extension talks indeed cross the finish line, Lugo will join Cole Ragans and Michael Wacha as Royals starters under contract through at least the 2027 season, depending on the specifics of Lugo’s new deal. Wacha’s three-year, $51MM deal signed last November also came under the specter of a player option, as Wacha had the ability to opt out of his $16MM salary for the 2025 season and test the market. Ragans inked a three-year, $13.25MM extension last February that was more about cost certainty than team control, as the deal only covers the southpaw through his second arbitration-eligible year — Kansas City still has arb control on Ragan through the 2028 campaign.
Between this trio, breakout rookie Noah Cameron, and the Royals’ remaining year of arbitration control on Kris Bubic, Kansas City’s 2026 rotation may already be set. This doesn’t include such injured pitchers as Kyle Wright and Alec Marsh, so K.C. has a good deal of pitching depth in place as the club tries to figure out the greater issue of its lack of offense.
Lugo’s career-opening seven-year stint with the Mets saw the righty begin as a starter, before moving into more of a part-time starter/swingman role and then finally as a full-time reliever in 2021-22. Heading into free agency following the 2022 campaign, Lugo was looking to make a return to the rotation, and landed a two-year, $15MM free agent deal with the Padres that included a player option on the 2024 season. After a solid year in San Diego, Lugo declined that option and returned to free agency to find his three-year commitment with Kansas City.
Over two-plus seasons since his return to starting pitching, Lugo’s ERA has dropped from 3.57 in 2023 to 3.00 in 2024 and to 2.95 this year. His SIERAs have remained almost identical in that span, averaging out to a 3.98 number that is probably a fairer reflection of his production than his 3.17 ERA over 466 innings since Opening Day 2023. Despite allowing a lot of hard contact and posting subpar strikeout rates, Lugo has consistently outperformed his peripherals by limiting walks (6.2BB% in the last three seasons) and an elite curveball spin rate, not to mention a fastball that also has plenty of spin despite its modest 91.6mph velocity.
Lugo has gotten a fair amount of batted-ball luck to support his numbers, yet as he is now in his third productive year as a starter, the veteran is clearly doing more than just relying on good fortune to retire batters. He has also answered all questions about whether he was durable enough to hold up in a rotation by pitching 206 2/3 innings in 2024, which was a key reason why Lugo finished second in AL Cy Young Award voting.
It was enough for the Royals to commit an additional $31MM to Lugo on top of the $15MM they had already agreed to pay him through 2026. It’s a significant chunk of change for pitcher’s age 36-37 seasons, yet obviously the Royals have loved what they’ve gotten from Lugo to date and believe he can keep it up deeper into his 30’s. The $23MM in average annual value is a little eye-opening, though as MLBTR’s Contract Tracker tells us, 11 pitchers of age 30 or higher have topped that AAV in free agency over the last three offseasons.
It is also noteworthy than the idea of Kansas City signing a player to such a contract is no longer as surprising as it would’ve been even a few years ago. Now that the Royals have moved out of a rebuild period, owner John Sherman has greenlit higher spending, most notably Bobby Witt Jr.’s long-term mega-contract. The Royals’ playoff appearance in 2024 was evidence that the team’s roster-building is paying dividends, and while their 2025 record has disappointed, there is enough of a pitching core in place to suggest that even league-average hitting could get K.C. back to the postseason. The club’s recent additions of Adam Frazier and Randal Grichuk suggest that the Royals haven’t given up on making a late run this year, even if bigger lineup upgrades will probably be saved for the winter.
ESPN’s Jeff Passan was the first to report that the two sides were closing in on an extension. MLB.com’s Anne Rogers (multiple links) had the details about the two-year length of the deal and the financial breakdown, while the New York Post’s Jon Heyman was the first to report that Lugo would be receiving a guarantee in the ballpark of $46MM.
Photo courtesy of Jay Biggerstaff, Imagn Images
