The Royals and right-hander Seth Lugo are in agreement on a three-year, $45MM deal, which is pending a physical. The Ballengee Group client will receive equal salaries of $15MM in each season, with the ability to opt out after 2025.

Lugo, 34, came up as a starter with the Mets but wound up spending most of his time as a reliever for that club. He reached free agency for the first time a year ago and was able to secure a gig with the Padres that allowed him to try his hand at starting again. It was a two-year, $15MM pact that allowed him opt out after the first year if his return to a rotation went well.

The move could hardly have gone much better. Lugo’s arm held up under the new workload conditions, as he made just one trip to the injured list all year, missing about a month due to a left calf strain. He took the ball 26 times and logged 146 1/3 innings with an earned run average of 3.57. He struck out 23.2% of batters he faced, walked just 6% and kept 45.2% of balls in play on the ground. That made his opt-out decision an easy one, as he left $7.5MM on the table and returned to the open market, with MLBTR predicting he could secure a three-year, $42MM deal this offseason.

Starting pitching has reportedly been in high demand this winter but Lugo’s market was never going to go too crazy due to his age. But given that he would be limited to a relatively modest deal, he was a plausible fit with far more clubs than the top names. Last month, it was reported by Robert Murray of FanSided that “more than half the league” was interested. The Tigers, Dodgers and Red Sox were some of the specific clubs named with interest in his services, but so were the Royals.

Starting pitching has been an ongoing issue in Kansas City for a few years now, with their plans for a homegrown pitching staff largely falling short of expectations. In 2018, the club had five picks in the first 58 selections of the draft and used all of those on pitchers: Brady Singer, Jackson Kowar, Daniel Lynch IV, Kris Bubic and Jonathan Bowlan. None of those picks looks amazing at the moment.

Singer looked to break out in 2022 when he posted an ERA of 3.23 but that jumped to 5.52 this year. Kowar has been rocked for an ERA of 9.12 in his first 74 innings and was traded away this offseason. Lynch has a 5.18 ERA through his first 252 MLB innings. Bubic hasn’t been great for most of his career. He showed some encouraging signs of development at the start of 2023 before requiring Tommy John surgery after just three starts. Bowlan has just three major league innings but his minor league ERA has been just under 6.00 in the past two seasons.

The struggles of those drafted players, as well as from free agent signee Jordan Lyles, led to the club’s starters posting a collective ERA of 5.12 in 2023. Only the Reds, Athletics and Rockies were worse. General manager J.J. Picollo clearly stated that adding starting pitching was a goal this offseason and that the club should have about $30MM to spend on upgrading the 2024 club. This deal will accomplish the goal of adding to the rotation while using half of the available funds. For Lugo, he obviously made some wise decisions, both in returning to the rotation and returning to the open market this winter.

One bright spot in the club’s rotation last year was the breakout of Cole Ragans. After being acquired from the Rangers in the deadline deal that sent Aroldis Chapman the other way, Ragans posted a 2.64 ERA in 12 starts for his new club. He and Lugo should be atop the club’s rotation next year. Singer should be in there as well, looking to bounce back into something closer to his 2022 form. Lyles is in a comparable position, having registered a 4.42 ERA in 2022 but a 6.28 in the most recent season. He’s still owed $8.5MM and hasn’t been on the injured list since 2019 so he will probably get another opportunity to eat some innings. Pitchers like Lynch, Alec Marsh, Ángel Zerpa and others could be options for the back end but the club could also look for more external additions as the offseason continues.

As mentioned, Picollo used $30MM as a ballpark figure for available funds. The club also agreed to a deal with reliever Chris Stratton today, which comes with a $4MM guarantee, and a $5MM deal with Will Smith on the weekend. When combined with Lugo’s $15MM salary next year, that’s $24MM agreed to in the past few days.

Anne Rogers and Mark Feinsand of MLB.com first reported that the two sides were nearing agreement on a deal. Jon Morosi of MLB.com first reported the three-year term and Jon Heyman of The New York Post had the $45MM guarantee. Feinsand first reported on the opt-out while Robert Murray of FanSided relayed the even distribution of the money.