Arsenal will scrap their wage cap in a bid to keep star striker Robin Van Persie and attract world-class signings after an FA Cup defeat at Sunderland left the Gunners trophyless for a seventh year.
The FA Cup represented Arsenal's only realistic chance of silverware this season but a goal from Kieran Richardson and Alex Oxlade-Chamberlain own goal sent Arsene Wenger's men crashing at the Stadium of Light.
A 4-0 drubbing at AC Milan last Wednesday meant Arsenal have very little chance of progressing to the quarter-finals of the Champions League and they are 17 points off the pace in the Premier League.
According to the Sunday Mirror, there is now an acceptance among the Gunners' hierarchy that there must be a major change of direction with regards to their cost-cutting recruitment policy.
Arsenal have found to their detriment in recent times that the lure of lucrative contracts offered by the likes of Manchester City can tempt talented young players to leave the Emirates - such as Samir Nasri, who left in the summer.
Wenger is now to be given the green light to spend big on transfers and improve the wages of his stars players, with Van Persie, who has one year left on his current deal, likely to be first beneficiary.
Frenchman Wenger has also been criticised for sitting on a £57 million transfer kitty following the sales of Cesc Fabregas, to Barcelona, and Nasri to City.
But the board will now urge their frugal a manger to spend the cash on top transfer targets such as Eden Hazard of Lille and Mario Goetze of Borussia Dortmund.
The current Arsenal team is in real need of improvement and following Saturday's FA Cup defeat, Roy Keane, who enjoyed many battles against Wenger's team during his playing days with United, said the current side is a shadow of the one he remembers.
Keane, who covered the Sunderland match for ITV, said: "This is the worst Arsenal team I have seen in my time watching football. There is a lack of desire and a lack of passion."