Crazy transfer market a major headache for Reid

But the Wearside boss believes the possible scrapping of fees for players by the EEC under the Treaty of Rome could have a devastating effect on the European game.

Reid, who admits he might have broken the club record of £4m on a couple of players this summer - Arsenal's Ray Parlour and Aston Villa's Ugo Ehiogu - is apprehensive about the awaited judgement from Europe, which could have an even greater effect than the Bosman ruling, which allows players to move on freely at the end of their contracts.

Reid's biggest close-season buy has been the £3.5m Argentinian defender Julio Arca, who is currently waiting to receive a passport on the strength of his Italian ancestry. But he knows that to take Sunderland to the Premiership's top bracket he will have to try to bring in much more expensive players under the current transfer system.

He admitted: "I cannot yet compete at the top end of the market but, hopefully, in a year or two's time I will be able to do that.

"The current level of transfer fees frightens me. I think it is crackers the amount of money being paid out, but it is the nature of the game.

"But transfer fees have gone through the roof and it is a major problem."

"The ruling next month about transfer fees by the EEC will be very, very interesting and could have as big an impact as the Bosman ruling.

"I think it is a major concern and we are very much in the dark at the moment. We won't know what's going to happen until some time next month."

Reid, however, was happy to pay out close to a club record for Arca, who is only 19 and not a fully-fledged international, and hopes he will be given his passport next week, enabling him to be considered for next Saturday's game at Ipswich.

Reid said: "He is a lad who excites me. People might talk about him being a left back, but he can play in a few positions.

"I think we have got value for money with Arca.

"He comes out of defence with the ball and he can pass it, which gives you another option.

"Once his passport is sorted out - and we are trying to do everything right through the British Embassy - I would have no qualms about playing him"

Reid revealed that although he had made five new signings this summer efforts to make a bigger impact in the market had been thwarted.

He said: "It will be hard to get in top players but that's what we have to try to do and there is more chance now than there was a couple of years ago.

Meanwhile, goal ace Kevin Phillips won't know until just before Sunderland's opening home game against Arsenal this afternoon if he will be in the starting line-up against his boyhood favourites.

The 27-year-old striker, whose 30 Premiership goals last season earned him the Premiership Golden Boot and Europe's Golden Slipper awards, has not played a competitive game since England's friendly victory in Malta on June 3 and manager Peter Reid admits the star is nowhere near match fit.

But Phillips is such an important part of the Sunderland armoury that Reid could decide to throw him in at the deep end rather than take the more cautious approach of naming him as substitute.

"I know most of the fans will be anxious about Kevin because he had such a good season on our return to the Premiership," said Reid.

"The majority of the players who have had injuries are back in training and are available.

"There is a problem with match fitness because some of the lads haven't had the pre-season matches I would have liked them to have.

"I will have to make a few decisions before the game, but that's what I am paid for.

"I will decide who I think is fit enough to come into the team and that includes Kevin Phillips, Niall Quinn, Steve Bould and Paul Thirlwell.

"In an ideal world I would have liked them all to be match fit, but you have to go in there thinking positively and having five substitutes gives us some breathing space.

"I think on the first day of the season the adrenalin sees most players through and you don't get many bigger opening games than Arsenal.

"The lads might be worried about their fitness but they all want to play.

"Even though they have lost players Arsenal have a fantastic squad and these are the sort of games you look forward to. It is one you feel the players are up for."

The capacity of the Stadium of Light has been increased to 48,500 and the playing surface has been relaid.

Reid said: "We trained at the stadium twice this week to let the players get a feel of the place.

"The pitch has not been at its best over the last couple of season but now I think it is the best since the stadium was built.

"With the extra few thousand people in it will be a fantastic atmosphere."

Reid accepts that Arsenal are one of the best sides in the country and he includes them with Manchester United, Chelsea, Leeds and Liverpool in his top five.

He said: "It is a massive game and I think it is going to be a really difficult season.

"But I know I have a good squad of players and all I want is my team to go out and do their best.

"There were a couple of times last season I thought we lost too easily. This time we have to go out and prove to be hard to beat.

"There is a massive gulf between the top teams in the Premiership and the rest.

"Arsenal have a lot of world-class players and while we have come a long way over the last couple of years we still have a long way to go to catch them.

"But on the pitch it's 11 against 11 and I think it is a fantastic opportunity for the players and the supporters against a very good side.

Sunderland's £2.5m close-season capture from Everton, Scottish international Don Hutchison, is ruled out by a one-match suspension while Scottish B international midfielder Alex Rae is serving a four-match ban