The former Germany international was due to be out of contract at the end of last season, before he signed the deal, and could have left the club for free.
He now earns a reported £350,000 a week to keep him with the Gunners until 2021.
I think he would never have got the deal that he got at Arsenal if it wouldn’t have been the time of Arsene Wenger’s departure
Tony Cascarino on Arsenal star Mesut Ozil
However, Mesut Ozil has been out of favour under new head coach Unai Emery this season.
The 30-year-old has been left out of the side on a number of occasions, with Emery claiming he has not got the intensity for some opposition.
Cascarino reckons Arsenal gave Ozil a new deal to make a statement, with former boss Arsene Wenger leaving at the end of last term.
But he believes Emery has been left with an expensive problem in the shape of the former Real Madrid man.
Arsenal news: Cascarino has criticised the decision to give Mesut Ozil a new contract (Image: TALKSPORT/TWITTWR)
Arsenal news: Mesut Ozil has been out of favour under Unai Emery (Image: GETTY)
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“I think he would never have got the deal that he got at Arsenal if it wouldn’t have been the time of Arsene Wenger’s departure,” Cascarino told talkSPORT.
“The club felt like they needed to make a statement.
“I don’t think Unai Emery would have agreed to have a player on such high wages.
“It’s given him a problem as in he thinks ‘you don’t make my first XI’.