Seth Lugo finalizes 2-year extension with Royals

KANSAS CITY – Trade Seth Lugo? How about extending him?

The Royals on Monday finalized a two-year contract extension with right-hander Seth Lugo, keeping the veteran starter in Kansas City beyond 2026.

Lugo’s extension is worth a guaranteed $46 million, according to a source, and will begin in 2026, with a vesting option (which becomes guaranteed if he reaches a certain performance incentive threshold) for '28.

Lugo, 35, will make $20 million each in 2026 and ‘27, according to a source, with the vesting option worth another $20 million or a $17 million club option (with a $3 million buyout). Lugo also receives a $3 million signing bonus. If Lugo reaches all incentives and the contract is maxed out, it would be for three years and $63 million.

Lugo’s name has popped up several times in trade rumors as Thursday’s Trade Deadline looms closer, but the Royals were hesitant to trade Lugo, who has been a top-of-the-rotation starter for them since he signed with Kansas City as a free agent in 2023.

It's hard to overstate how much Lugo means to the Royals both on the field, and off the field as a veteran whose quiet but steady demeanor carries a ton of weight in the clubhouse. In his first season with the team last year, he was an All-Star and finished second in American League Cy Young Award voting. Across 52 starts as a Royal in 2024 and ‘25, Lugo has a 2.98 ERA.

That’s the best ERA in franchise history among those that have made at least 50 starts for the team.

Lugo is in the final year of a two-year, $30 million contract with Kansas City but holds a $15 million player option for 2026. Given his 2.95 ERA this season, it was likely he was going to decline it and potentially become one of the top free agent starters this offseason. The Royals were eager to avoid that scenario and re-sign him to a multi-year deal, similar to what they did with Michael Wacha this past offseason.

Lugo might be turning 36 in November, but the mileage on his arm is low -- with just 960 2/3 innings across parts of 10 seasons -- given he spent the first part of his career as a reliever with the Mets. Once Lugo hit free agency for the first time after the 2022 season, he bet on himself as a starter and spent a year with the Padres proving it with a 3.57 ERA across 26 starts in 2023.

As part of the Royals’ free agent frenzy following their 106-loss season in ‘23, they pegged Lugo as one of the anchors of their rotation and signed him that winter. He responded by throwing 206 2/3 innings in 33 starts with a 3.00 ERA while making his first All-Star team and helping the Royals to their first postseason appearance in nine years.

It’s been more of the same for Lugo this season, even as the Royals have encountered more struggles with their offense and health of the rest of their rotation in 2025. Lugo has only missed two starts, when he was on the 15-day injured list in May for a right middle finger sprain.

General manager J.J. Picollo said on Friday that an extension for Lugo was something the Royals had discussed already internally. Picollo said that Lugo knew of the team’s desire to keep him a Royal, and the feeling was mutual. Lugo and his family love Kansas City, and Lugo works really well with the Royals’ pitching team headed by pitching coach Brian Sweeney.

Instead of waiting until the winter, they knocked out a rare in-season extension with Lugo, who is slated to make his next start in Kansas City on Tuesday against the Braves.

At 52-54, the Royals are fighting to stay in playoff contention. After a big series win this weekend against the Guardians, Kansas City sits four games back of an AL Wild Card spot with two teams ahead of them. With the Trade Deadline coming up this week, the club has resisted the thought of “selling” and turning its focus to 2026; instead, there’s a strong belief in the core pieces of the roster not only for this year but beyond.

Keeping Lugo signals that belief. The Royals need strong pitching, especially with an offense that has struggled to produce runs this year, but even their additions of veteran hitters Adam Frazier and Randal Grichuk, both of whom are free agents at the end of the year, also suggest the Royals haven’t given up on the idea of making a late run in 2025.

Lugo also brings them rotation stability for the final months of 2025 – and at least the next two years, too. There are certainly still questions surrounding the health of the rotation, as the Royals have three starters on the injured list in Cole Ragans (left rotator cuff strain), Michael Lorenzen (left oblique strain) and Kris Bubic (left rotator cuff strain).

But keeping Lugo, who has become one of the most reliable starters in baseball, in the Royals clubhouse goes a long way toward building sustained success.