Quarterback Mark Sanchez reached an agreement with the New York Jets to extend his contract by three years through the 2016 season, the team said.

Terms weren’t disclosed by the team. The three-year deal is worth $40.5 million, ESPN reported, citing a person with the National Football League. The five-year total of $58.25 million, with $20.5 million fully guaranteed, makes him the seventh highest paid quarterback, the sports network reported.

The deal includes an additional $10 million in potential escalation, ESPN said.

Sanchez directed the team to an 8-8 record that missed the playoffs last season. He had two years left on the contract he signed after being selected by the Jets in the 2009 draft. In his first two seasons, he led the team to the American Football Conference championship game as a wild card.

“Mark’s a guy we identified that we wanted to sign to an extension,” General Manager Mike Tannenbaum told reporters last night in announcing the five-year deal. “Mark’s our starter and we’re excited about 2012.”

Tannenbaum said he contacted Peyton Manning’s representatives after the quarterback was released by the Indianapolis Colts on March 7.

“Part of my duties when opportunities come along are that we have to investigate it,” Tannenbaum said. “Peyton’s a future Hall of Famer, a tremendous person. We looked into it and had internal discussions, but we continued to talk with Mark’s representatives all the way through it.”

Sanchez, 25, started all but one game in his three seasons with the Jets. Last season, he set career highs with 543 attempts, 308 completions, 3,474 yards and 26 touchdown passes.

To contact the reporter on this story: Nancy Kercheval in Washington at nkercheval@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net