Former midfielder Arteta spent five years at Arsenal as a player and has flourished as Pep Guardiola’s assistant over the past three years, helping City win back-to-back domestic titles.
Cascarino says Arteta faces a challenge in dealing with Arsenal’s senior players and has suggested he should offload Aubameyang, Alexandre Lacazette, Mesut Ozil, David Luiz and Shkodran Mustafi.
‘The biggest challenge he will face is dealing with the senior players,’ Cascarino told The Times.
‘I remember when Ron Atkinson came into Aston Villa, he said to me immediately: “I have agreed a fee with Celtic for you.”
‘That is how Arteta should approach it, starting with Pierre-Emerick Aubameyang, Alexandre Lacazette, David Luiz, Mesut Ozil and Shkodran Mustafi.’
Cascarino also believes Arteta should try and make Manchester City star Fernandinho one of his first Arsenal signings.
Arteta has reportedly been identifying transfer targets in talks with Arsenal over the past week.
‘With Fernandinho’s contract due to expire at the end of the season, Arteta could bring him in from City to demonstrate to Arsenal’s players what it takes to be a success,’ he added.
‘I don’t even think he needs to give them a reason, he just needs to say, “If I find a buyer, you’re gone.”
‘Lacazette has been a decent performer but Arteta will want a player who doesn’t sulk, and he could sell him for a big fee.
‘It may seem drastic, but that is what Arsenal need.’
Arsenal, who are currently tenth in the Premier League, face Everton this weekend.
Everton endured a shocking start to the season but have picked up four points from their last two games against Chelsea and Manchester United under caretaker boss Duncan Ferguson.