CHICAGO (AP) -- Jake Peavy saw no need to test the free-agent market. So rather than shop himself, he is staying put in Chicago.
The veteran right-hander and the White Sox agreed Tuesday to a $29 million, two-year contract.
"I never wanted to play any games with my desire to stay with Chicago," Peavy said on a conference call Tuesday night. "I was open and up front about that in hopes that it would work out. Today is a great day for me and my family and, I hope, for the White Sox, as well."
Peavy will earn $14.5 million in each of the next two seasons. He would receive a $15 million option for 2015, depending on innings during the next two years.
Peavy's previous deal included a $22 million option for next season with a $4 million buyout. The buyout will be paid in equal installments from 2016-19.
Chicago also exercised a $9.5 million option on right-hander Gavin Floyd, declined a $10 million option on right-hander Brett Myers, and turned down a $13 million option on third baseman Kevin Youkilis. Myers gets a $3 million buyout, and Youkilis will receive one for $1 million.
Peavy, the 2007 NL Cy Young Award winner, went 11-12 with a 3.37 ERA in 32 starts this year after three injury-riddled seasons. The White Sox defied most expectations, leading the AL Central for much of the season but ultimately finishing second behind Detroit.
Peavy realizes he would have been one of the more attractive players in free agency, and he might have been able to sign with a stronger team.
"We certainly knew those options were out there," he said. "The loyalty, the way I feel about the White Sox organization, the way I feel my time has gone there - I just can't say enough about how strongly I feel about the city of Chicago, the fan base that stood behind me through a few rough years with injury. I certainly did all in my power to be where we are today, and that's returning to the place that I'm the happiest."
General manager Rick Hahn said the White Sox made their initial offer to Peavy the Monday after the season ended, but negotiations really started heating up over the previous three days. Settling on two years was a big factor.
"The length was absolutely key for us, and being able to insulate ourselves against having a longterm deal - and the risk involved in any long-term deal, much less with a pitcher," Hahn said. "Being able to do something on a shorter basis had a great deal of appeal to us. ... But the overarching drive to do this was to have Jake Peavy with us, and we were able to do it on terms that we found palatable. "
With Peavy and Chris Sale at the top, the White Sox believe they have a deep rotation. Floyd is a key part of that. He was 12-11 with a 4.29 ERA and 144 strikeouts in 29 starts last season, his fifth straight year with double-digit wins.
They still have some issues to address, with A.J. Pierzynski on the market and a possible hole at third base. Hahn isn't ruling out bringing back Youkilis, who helped solidify the position after a trade from Boston in late June and batted .236 with 15 home runs in 80 games for Chicago.
He isn't closing the door, either, on Myers after he went 3-4 with a 3.12 ERA in 35 relief appearances with Chicago following a trade from Houston on July 21.
Hahn also said he doesn't plan on making qualifying offers to those three before Friday's deadline.
"They're going to hear from other clubs, likely receive offers and stay in touch with us," he said.
Keeping Peavy was a signal that the White Sox are serious about catching Detroit.
"I can't say we're going to be the favorites," Peavy said. "At the end of the day, I don't think that matters to anybody in the clubhouse. I think you saw the attitude that (manager Robin Ventura) brought in. We didn't care what anybody else said about us. We knew who we were. I think the way that the season ended will do nothing but aid and fuel the fire."
The fact that Peavy re-established himself as a top pitcher and made his third All-Star team went a long way a long way toward the White Sox contending.
He reached 200 innings for the fourth time in his career and the first since his Cy Young season with San Diego, finishing with 219. His 194 strikeouts were his most since 2007 when he had 240, and his four complete games were both a career high and the most by a White Sox pitcher since Mark Buehrle threw five in 2004.
He also won a Gold Glove on Tuesday.
"Obviously, it's been a rough row to hoe early on for Jake in his tenure in a White Sox uniform," Hahn said. "But given how hard he works to prepare himself, given how hard he works between starts, given the influence he had not just on the starters but on all the guys on our pitching staff, he's just been a tremendous clubhouse presence for us over the last three years. And over his last year, we've really seen the performance we think he's capable of doing going forward."