The sacking of long-serving and highly successful manager George Graham following a bungs scandal saw Arsenal endure their most frustrating season in 10 years. They finished 12th in the Premier League - below unfancied London rivals Queens Park Rangers and Wimbledon - and also had to endure the loss of Paul Merson for three months while he underwent treatment to combat drug and gambling addictions.

Graham's assistant Stewart Houston took over as manager until the end of the season, and the changeover coincided with a horrible run of 6 defeats in 7 games, leaving Arsenal in serious danger of being relegated just four years after winning the title and two years after their domestic cup double. Fortunately the team rallied in the final weeks and took 8 points from their final 5 games, securing their Premier League spot. The FA Cup only added to the frustration, as they were embarrassingly knocked out at the first hurdle by London rivals Millwall, though they at least had a comparatively decent League Cup run, losing in the fifth round to eventual winners Liverpool.

Despite their domestic troubles, the team reached the European Cup Winners' Cup final for the second year in succession. With 120 minutes showing on the clock in Paris, a penalty shoot-out was looking certain as Arsenal were drawing 1–1 with Real Zaragoza. But a last minute goal by former Tottenham Hotspur player Nayim from 40 yards out saw the Gunners lose defence of the trophy and it went to the Spaniards instead.

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Wikipedia