Capps will earn $750,000 this season, split between a $500,000 base salary and a $250,000 signing bonus. Next season, his salary will increase to $2.3 million and have a chance to rise slightly more with incentives based on number of games finished.
The contract will trump the one-year, $435,000 contract Capps had been given this season. The deal also enables the Pirates to buy out the closer's first arbitration-eligible year.
The Pirates initially approached Capps and his agent back in December, hopeful of reaching a deal that could have potentially extended through Capps' first year of free agency. With the two sides differing significantly in terms of dollar figures, however, the focus shifted to a three-year contract, before reducing that by one year in the end.
"I appreciate them not giving up on us," Capps said on Friday. "I'm pleased to see something happen. It's just a two-year deal, but it shows the confidence in me and that they believe what I can do. It's a small step in the right direction."
The hesitancy from the Pirates to match Capps' request from a salary standpoint is rooted in the organization's philosophy to be cautious when signing pitchers -- especially relief pitchers -- to multiyear deals. General manager Neal Huntington noted the risk in doing so, which is a risk that the Pirates, with a limited budget, wouldn't be able to liberally afford.
"The track record with most pitchers is a difficult one, but relievers in particular," Huntington said. "The relievers are the most volatile of all the positions on the field. But while we believe in Matt, while we think he'll be successful going forward, the track record that he's facing going forward is not a good one."
If the two sides are unable to extend this deal any further during the next two years, Capps would be arbitration-eligible in both 2010 and '11 before he would be able to test the free-agent market for the first time in 2012.
For Capps, the more than $3 million he will be earning over the next two seasons is a tangible reward for his emergence as one of the top young closers in baseball. At just 24, Capps is beginning his second season as the Pirates' closer.
It wasn't until Salomon Torres lost the closing duties two months into the 2007 season that the hard-throwing Capps stepped into that role. From there, he converted 18 of his 20 save opportunities and led the club with 76 appearances.
Capps had been a seventh-round pick out of Douglasville, Ga., in the 2002 First-Year Player Draft and initially entered the Pirates' Minor League system as a starter. It wasn't until Capps was moved to the bullpen after the 2004 season -- a move that Capps deemed to be a demotion -- that he found his fit. He was admittedly upset about the transition initially. Little did he know that it would be his fast track to the Majors.
"It's the best thing that ever happened to me," Capps said. "I learned more from that experience and that year than anything else that's ever happened any other year of my career. I learned a lot about myself. I learned a lot about the game. And most importantly, I learned how bad I really wanted it."
Capps joined the big league club at the end of the 2005 season before appearing in a club-record 85 games the following season. Capps then followed with his breakout year in 2007, when he finished with a team-low 2.28 ERA.
As for how this new contract is going to change Capps' way of life? Well, in short, it won't.
"It kind of secures a few things," Capps said. "I'll maybe pay off my house or something like that. My lifestyle is not going to change that much. I'll still be driving the same car, wearing the same clothes."
Jenifer Langosch is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.