Speaking to Gary Rose of BBC Sport, Sir Alex Ferguson's former No. 2 is concerned the £16 million departure may be the start of a new era at Old Trafford—and not necessarily for the better:
Danny Welbeck has been part of United's identity and that has been broken. What will happen in the future now, nobody knows but that thread has been broken now.
There is always the start of something and maybe this is the start of a new way of doing things at Manchester United and maybe that is the way football is going. Is it better to look at the instant rather than the future? It is a difficult one because youth is always the future, we all have to start somewhere and you just hope that product of youth can develop in the Premier League.
Arsenal have a very good, young talented English player.
To see him leave Manchester United is sad. He had been there since he was eight and his heart was in Manchester.
Phelan was assistant to Ferguson for five years up until the Scot's retirement from the sport in 2013, and he oversaw the development of numerous academy talents during that spell, one of whom being Welbeck.
Despite their success over the past decade, United have done a fine job of maintaining strong links with youth production, refusing to adopt the same investment pattern of other big spenders in England.
However, with more than £150 million spent on transfer fees this summer and Welbeck their biggest return, the signs are there that foreign acquisitions may begin to reign dominant at the club.
Ex-Manchester United striker Michael Owen insists Arsenal have pulled off a great signing with his former team-mate, who will have his chances in a more favoured central attacking role thanks to Olivier Giroud's four-month injury layoff:
It emerged on deadline day that the Gunners were hoping to cut a deal for the England international, and with Welbeck largely a fringe option in recent seasons, it's no great surprise to see the Red Devils cash in.
The more significant statement, however, is that United would rather plump for superstars like Radamel Falcao and Angel Di Maria for great sums of money than they would invest time and patience in less assured, homegrown talent.
It wasn't always the way of things when Ferguson was at the helm, but with Louis van Gaal now their leader, the importance of British prospects thriving may be less of a priority for the club.
Arsenal, on the other hand, have another Three Lions squad member on their hands, with The Telegraph's Jeremy Wilson agreeing that times are changing for the two giants. The Daily Mail's Lee Clayton agrees:
Like Ferguson, Phelan is a figure of a time gone by at the Theatre of Dreams, but he will be as well versed with how their recent glory came about as anyone else.
In the wake of that management change, United are in crisis, yet to win a game in the 2014-15 campaign and evidently hoping the transfer market will change their fortunes.
Indeed it might, with the likes of Falcao, Di Maria, Daley Blind and Marcos Rojo pushing to give them a much-needed boost back to the top, but does that change in morals represent too high a cost in more than money alone?