The 1977–78 season was Arsenal Football Club's 52nd consecutive season in the Football League First Division. It was Terry Neill's second season as manager. Arsenal finished fifth in the league. In cup play, Arsenal reached the semi-finals in the League Cup, losing to the previous season's league and European champions Liverpool. Arsenal were also in the finals of the FA Cup, the first of three consecutive FA Cup finals that Arsenal would reach under Neill. They lost 1-0 to Ipswich.
In the transfer business, Pat Jennings joined the club from Tottenham Hotspur. He would go on to make over two-hundred appearances for Arsenal. Alan Sunderland joined Arsenal at centre forward where he would remain an important player for several seasons. Neill also brought in Don Howe as an assistant.
Beginning with a difficult pre-season tour in Singapore and Australia, Terry Neill struggled with Malcolm Macdonald and Alan Hudson and disciplined them due to poor behavior. Arsenal had relied heavily especially on Macdonald in previous seasons and the management was hoping to strengthen team play, which Macdonald found difficult at times.[1]
After an eighth place finish in Neill's first season, the manager was looking to improve the squad. First, he brought in former Arsenal player and coach Don Howe for £40,000 as his assistant.[2] Neill then looked to improve Arsenal's goalkeeping in the transfer market. Jimmy Rimmer, a solid performer in the 1975-76 season as Arsenal fought relegation, moved to Aston Villa. In came Pat Jennings at age 32 after spending thirteen years at Tottenham.[3] Arsenal also brought in striker Alan Sunderland from Wolves for £70,000.[1] Outgoing players included left-back Wilf Rostron,[4] and midfielder (and former academy player) Trevor Ross.[5]
Arsenal began the season with a 1-0 loss to Ipswich while playing in a hailstorm in what would be an echo of the FA Cup final later in the season. Arsenal, though performing better than the previous season, struggled with the squad depth to challenge for the league championship. They ended up fifth in league play.[1]
In the League Cup, Arsenal beat Hull and Southampton at Highbury before going to a second game against Manchester City in the quarterfinals. Macdonald won a penalty which was put in by Liam Brady, who at that point had scored a goal every round. Arsenal then faced Liverpool, English and European Champions, in the semifinals. Arsenal lost 2-1 at Anfield, followed by a goalless draw at Highbury.[1]
In the FA Cup, Arsenal beat Manchester United 3-2 in the second-round tie at Highbury. They then faced Walsall who had knocked Arsenal out of the FA Cup 45 years previous, beating them 4-1 soon after their semifinal loss to Liverpool in the League Cup. Arsenal beat Wrexham 3-2 in the next round before clearing Orient 3-0 in the semifinal. Arsenal was to face Bobby Robson's Ipswich in the final. Arsenal struggled with injury problems,[6] with Sunderland recovering from a broken foot, Macdonald requiring a knee operation, and Brady being carried off with an injured ankle versus Liverpool. All of them featured in the game. Roger Osborne scored the only goal for Ipswich. Macdonald went into surgery three days later, the beginning of the end of his career.[1]