Lugo will be staying in KC.
The Royals have signed pitcher Seth Lugo to a contract extension, according to ESPN reporter Jeff Passan. Lugo had a $15 million player option for next year that he was likely to decline.
BREAKING: Right-hander Seth Lugo and the Kansas City Royals are finalizing a multiyear contract extension, sources tell ESPN. One of the best potential trade candidates this deadline season — and top free agent arms this winter — instead will remain in Kansas City.
— Jeff Passan (@JeffPassan) July 28, 2025
Anne Rogers writes the deal is for two years, $20 million with a $20 million vesting option or a $17 million club option with a $3 million buyout. Lugo also gets a $3 million signing bonus. In all, the deal guarantees $46 million, but Lugo can earn up to $63 million.
Source confirms that Seth Lugo’s extension is worth a guaranteed $46 million for two years.
$20 million each in 2026 and ’27. Vesting option is worth $20 million or a club option for $17 million (with $3 million buyout). Lugo also gets a $3 million signing bonus.
— Anne Rogers (@anne__rogers) July 28, 2025
The 35-year-old has a 2.95 ERA in 19 starts this year and was a runner-up in Cy Young voting last year. He was considered one of the most coveted potential trade candidates at the deadline. However, he has a 4.27 FIP, the largest difference between ERA and FIP among qualified starters. Lugo has gotten stronger as the season has gone on, with a 2.38 ERA over his last nine starts since the start of June.
The Royals originally signed Lugo to a three-year, $45 million deal before the 2024 season, although the last year of the deal was the player option. He had been a reliever for most of his career with the Mets before going to the Padres in 2023 and making a career-high 26 starts. He moved on to the Royals and flourished with a 3.00 ERA and 16 wins as a 5.4 rWAR pitcher in his first year in Kansas City.