The Gunners started the transfer window with just £45m to spend following their failure to qualify for the Champions League.
Chelsea’s victory over Arsenal in the Europa League final at the end of May seriously dented Unai Emery’s hopes of spending big.
He subsequently added teenage forward Gabriel Martinelli to his squad, landing the 18-year-old for £5m from Ituano.
But Arsenal have had to get creative in their deals in order to now blow their budget on one or two signings.
Dani Ceballos joined on loan from Real Madrid, while William Saliba’s £27m move from Saint-Etienne saw Arsenal pay a minimal fee up front.
Those two deals confirmed on Thursday have left Arsenal with the bulk of their budget still in tact.
However, the £72m Arsenal have agreed to pay Lille for forward Pepe takes the club far beyond their budget.
So how have the Gunners funded such an enormous deal for the 24-year-old Ivory Coast international?
READ MORE: All the latest news on Nicolas Pepe’s move to Arsenal is in our Transfer News LIVE blog
“Arsenal will be paying Lille off over a gradual period of time”
BBC Sport say Arsenal have managed to pull off such a transfer due to their payment structure agreed with Lille.
Emery’s side will pay for Pepe via a series of instalments that suit their restricted budget.
Pepe is joining on a five-year contract, and Arsenal will be paying Lille off over a gradual period of time.
The Gunners turned their attention to Pepe after initially prioritising a move for Wilfried Zaha.
But a deal could not be agreed with Crystal Palace, who value their talismanic goalscorer at £80m.
Everton are instead pursuing a move for boyhood Arsenal fan Zaha.
Marco Silva has more money to spend this summer at Goodison Park than Emery does at the Emirates Stadium.
The Arsenal manager may not be finished adding to his squad once Pepe arrives, though.
If the Gunners have the budget to do so, they will continue trying to broker a deal for £25m Celtic left-back Kieran Tierney.