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Also, let's not forget that Jaret Wright had just pitched a game 7 gem in the world series... as a rookie. Hard to part with that, though yes Pedro was clearly a stud.
ETA: also, Pedro was coming up on a contract. Given the Indians history at the time, and hindsight... do we even re-sign him?
Certainly I would have.
But I think Jacobs would have balked.
Then again, having traded so much for him, they may have been forced to do it while perhaps parting ways with a high-priced bat.
I am not sure of the particulars of that season's roster, they had Sexson and Giles still, they probably could have parted with one of the high-priced guys (Justice? Whiten?) and not seen much if any drop in offensive production.
But Pedro would have changed everything I think. Especially come playoff time because that is the major weakness was having to start Nagy against an ace. Having Nagy as the 2nd pitcher takes a lot of pressure off and greatly lengthens the odds of winning a 7 Game series.
Because you can have Pedro pitch three games in a seven game series, Nagy twice, and only have to worry about Burba, Finley or Ogea pitching once.
The problem was always that other teams had their ace against whom Nagy was usually outmatched. And you could rely on Nagy for one win, and one good outing. And one good outing from Orel. And then one good outing from one of the other three. There just wasn't enough dominating pitching. The Indians only got to Game 7 in 1997 because of the highly unlikely happenstance of a rookie pitching like an ace twice.
So for Pedro coming in for 1998, it makes a lot of difference against the Yankees when you can throw Martinez against Petite or Wells, and then you have a very good shot with Nagy and Burba/Ogea in other games.
You aren't asking poor Chuck Nagy to match an ace every series.