Why trading Seth Lugo could be a mistake, and how the KC Royals might avoid it

Conventional baseball wisdom, at least as that term is used in many circles, strongly suggests the Kansas City Royals shouldn't hesitate to trade Seth Lugo before the July 31 major league trade deadline. Although he's one of the best starters the club has, and won 16 games last season, he'll more than likely decline his player option for 2026 and try his luck on this winter's free agent market. Keeping Lugo for the rest of this uncertain campaign could leave the Royals empty-handed if he leaves.

And that makes trading Lugo something the Royals have no choice but to consider, and consider seriously. Dealing him for big league talent if the Royals are deadline sellers, or prime prospects if they're not, makes sense.

But there is an alternative, one with the potential to enhance the Royals' chances for postseason play this year and in the future.

Extend Lugo ... or at least try to.

Why the KC Royals should explore a contract extension for Seth Lugo

The odds may be against general manager J.J. Picollo finding a way to keep Lugo who, despite surrendering more runs (five) in KC's Friday night loss to Miami than he had in any of his previous 17 starts, is still a big key to potential postseason play for Kansas City.

The club is far less likely to secure a Wild Card berth, its most likely path to October baseball, without him than with him. (After Friday's defeat, KC was 12 games behind first-place Detroit in the American League Central, but only 5.5 behind for a Wild Card).

What makes keeping Lugo complicated is the contract he signed with them two offseasons ago. It guaranteed him $15 million per season for 2024 and 2025, with a $15 million player option for 2026. Barring a trade before July 31, that option gives Lugo exclusive control over whether he stays or leaves.

And because he's 22-14 with a 2.90 ERA and 32 quality starts since becoming a Royal, he's all but certain to command in free agency more than the $15 million he can obligate KC to pay him next season if he picks up his option.

The dilemma, then, is this: try to quickly negotiate an extension with Lugo that will keep him in KC this year and next.

The task shouldn't be impossible. A two-year deal might not sound realistic considering Lugo's success in Kansas City, but it is — the reliable right-hander turns 36 in November, so he probably doesn't have several stellar seaons left. Teams looking for rotation help this winter won't jump to give him a long-term deal.

Lugo won't come dirt-cheap, though, and he shouldn't. Something in the range of a $20-25 million annual contract value is realistic, and such a deal won't unduly strain the Royals' checkbook.

After all, this is the last season of the then-club record multi-year deal Salvador Perez signed in 2021 and is paying him $22 million this year, and the Royals would be wise to reduce their 2026 costs by picking up his $13.5 million club option for next season instead of more expensively extending him. That would give Picollo some necessary financial room to deal meaningfully with Lugo.

So, too, could be the contract status of free-agents-to-be Mark Canha, Cavan Biggio, and recently reacquired Adam Frazier, all of whom seem unlikely to return next season. Presently-injured Michael Lorenzen may or may not return — he's subject to a mutual player-club option for 2026 — and it remains to be seen whether the team will bring back arbitration-eligible players such as Hunter Harvey, MJ Melendez, John Schreiber, and Kyle Wright. There are payroll savings to be had.

The Royals also have good reasons to take a run at convincing Lugo to stay. Losing him will punch a huge hole in their good rotation, one that, coupled with the current injuries to starters Lorenzen and Cole Ragans, could very well extinguish any hopes they have of snaring a Wild Card, and leave them hurting next season.

Triple-A Omaha also offers little, if anything, in the way of suitable replacements for Lugo, and the rest of the farm system doesn't boast a prospect who seems ready to work effectively against major league pitching.

The Royals could also use Lugo's veteran presence down the stretch and next season.

Whether the Royals try to keep Lugo depends on whether they want to and believe they can. At the end of the day, though, the temptation to test free agency for what could be the last time may be too much for Lugo to resist.