By Chris Harris

Arsène Wenger says Leeds United were sunk by simple economics when they plunged from the top of the Premier League to League One.

The Yorkshire club looked down on the rest of English football in the first month of the new Millennium and reached the last four of the Champions League in 2001.

But after “living the dream”, to quote their former chairman Peter Ridsdale, Leeds’ finances unravelled, their star players left and two relegations followed.

Manager Simon Grayson has helped arrest their decline, earning promotion back to the Championship last year and guiding Leeds into the play-off places this term.

And as Wenger prepares to renew a traditional top-flight rivalry in the FA Cup this weekend, he took time to reflect on the Yorkshire club’s sudden fall from grace.

“When you have no money you can only go down. It's down to management,” he said.

“The problem is that you're in an environment where everybody pushes you to act like finances are not important, but at the end of the month you have to pay everybody.

“No [I did not see Leeds’ problems coming] because they were continuing to buy. And after they sold some players, like Rio Ferdinand for £30million, you think ‘OK, now they can have a breather’, but the hole was much bigger than we expected.

“The only thing we have all learned is that when they announce £10milion debt, it's £30million.

“With Portsmouth it was the same. They sell a player and you think ‘OK, now they are safe’, but it's always worse than you imagine.”

Copyright 2014 The Arsenal Football Club plc. Permission to use quotations from this article is granted subject to appropriate credit being given to www.arsenal.com as the source 7 Jan 2011