The deal is worth $73 million and Grandal will get $18.25 million each season, the White Sox said.
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Grandal, 31, had a .246 batting average and .380 on-base percentage with 28 home runs and 77 RBI in 153 games with the Milwaukee Brewers last season. The two-time All Star has played eight MLB seasons with the Brewers, Los Angeles Dodgers and San Diego Padres.
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The contract is the largest free agent deal in White Sox history, eclipsing the 6-year, $68 million deal signed by Jose Abreu in 2013.