The Gunners legend believes his former side can be a threat next year with the right additions as the club look to close in on London rivals Chelsea and the two Manchester clubs
Ray Parlour has encouraged Arsenal boss Arsene Wenger to splash the cash this summer in order to ensure his former club challenge for major honours next season.
Goal revealed earlier this month how the Gunners are finally ready to flex their financial muscle by activating the release clause in Marouane Fellaini's Everton contract.
Arsenal are also exploring the possibility of moves for Gonzalo Higuain and Wayne Rooney as Wenger looks to bridge the gap between the north London outfit and the Manchester powerhouses.
Parlour feels such stellar names would get pulses racing around the Emirates, but stressed it may take significant spending to address the flaws in the squad
Parlour, who was speaking at the launch of the 2013-2014 Barclays Premier League fixtures, told Goal: "They need to go out and spend money now, reports are saying there's £70m available at the moment. If I was Arsene Wenger, I'd say go out and spend £100m and get the right players to have a real go of it next season.
"The whole point in moving stadium was to try to compete with the likes of Real Madrid and Barcelona but now they are trying to compete with the likes of Manchester City, Manchester United and Chelsea, who will probably get stronger next season.
"That's the most important thing for the fans, but now the club are in such a good state of mind with the stadium - they paid off a lot of money on that - and financially, they are in a very good situation.
"The players that work for him on a regular basis would be very excited to have the likes of Rooney in the side, Higuain, who is a very good player at Real Madrid, and Fellaini, who has had a great few seasons at Everton.
"That's the big question now, whether they can attract this sort of players to the club."
Parlour does not believe the Gunners' squad is in need of major surgery but concedes his former club need to add world-class reinforcements in key positions during the close season.
He added: "When you look at the side they've got, they've got very good players but they have to strengthen down the spine of the team.
"Striker-wise I know Higuain has been mentioned and Rooney would be a fantastic signing for Arsenal.
"They maybe need another midfielder who can win the ball back as well. I think [Mikel] Arteta was fantastic last year but another player who can slot into that role just in front of the back four, which is so important in today's football, would be ideal.
"I definitely think they need another central defender too. [Thomas] Vermaelen was obviously in and out of the team last year and didn't really play a lot of football and we don't know what's going to happen to him this summer.
"And maybe a goalkeeper, when you look at the lack of competition at the moment for [Wojciech] Szczesny. [Lukasz] Fabianski did really well when he came back into the side, but I don't know if that's the answer or not.
"If they can get the right players, they will definitely be a force next season."
Manchester United, Manchester City and Chelsea have all had to replace outgoing managers this summer, and with Wenger now the longest-serving boss in the league, Parlour feels the club can use that stability to their advantage in the upcoming campaign.
"I think it will be the most exciting Barclays Premier League season next year, with new managers coming in and out," he continued.
"You don't know how [Manuel] Pellegrini will settle in but I'm sure he will do a great job at Manchester City, David Moyes has got his chance at Manchester United, and obviously with Jose Mourinho coming back to Chelsea it is going to be interesting.
"So it may be an opportunity for Arsenal to say: 'Okay we've got the stability in the manager at the moment, can we get the right players now?'
"Top quality players want to play in the Champions League and that's why it was so important that we pipped Spurs to fourth place."
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