Sources -- Royals keeping Seth Lugo on 2-year, $46 million deal - ESPN

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