"It is hard because he’s a few notches down the pecking order now, especially with Havertz coming into the squad," Alan Smith told Gambling Zone on Folarin Balogun.
"I think the management probably see Nketiah being further ahead of him at the moment, they are similar types of players, and the club must think that Nketiah is a little bit better than Balogun.
"From Balogun’s point of view, he will be thinking more about how much game time he’s going to get. Given that he doesn’t want to go back out on loan, he may have to leave the football club.
"It’s always a shame when somebody has come through the ranks like that and does leave. There is every chance that he could go on and have a fantastic career elsewhere and score lots of goals.
"If he does move on, it will give Arsenal a chance to recoup quite a lot of money. He’s a valuable player who can probably fetch £30m plus after the season he had in France. With financial fair play and all the rest of it, that that could help Arsenal a fair bit.
Smith believes Arsenal should try to recoup some of the £72m they spent on Pepe, while he has urged Rob Holding, Nuno Tavares and Albert Sambi Lokonga to leave the Emirates Stadium.
"Nicolas Pepe, I haven’t seen too much about him in the papers regarding a move,’ Smith added. ‘He was bought for far too much money, and it’d be great to recoup some of that because I don’t think Arteta is a massive fan.
"You can’t hang your hat on him. Players like Tavares and Lokonga, promising youngsters, could move on. Arteta certainly does need to get two or three players off of the wage bill.
"Rob Holding has been linked with a move away. There’s not much potential for him to get into the team now. I think you’d be loathe to let him go because he just seems like such a good team player.
"Holding is great in the dressing room and he will always give it his all but he is probably a level below where you need to be for Arsenal. He may have to leave."
