Right now I'm on my way towards winning the league. My only question is, the money that I have got from winning the league, will it be used to repay debts, or can still spend a reasonable amount of money?
The debt is fixed as a monthly payment so each month, whatever your earnings our, that payment will be taken from club coffers, being Arsenal, it will not effect your finances greatly and you will get good budgets. Most of the money you get will go towards your wage bill and transfer funds.
Arsenal have their finances sorted out well and the prize money(most of it) is a bonus to the club finances, so you will have something extra to spend thanks to it. But should you, say double the wage bill, then it might go directly to the bank.
And from my own Arsenal game I remember the owners taking about 15M out of the club each season and I spent quite hard, so the finances are well under control at Arsenal.