
Consolidation was the key word here, as I adopted a more defensive approach. Details are a bit hazy as this was some time ago, but I remember a 4-1-3-2 formation with two wide midfielders and one forward dropping back behind the other one. I had a fairly strong start, but couldn't cope with the leading clubs in the second half of the season, and eventually slotted into mid-table.
I reached the third round of the FA Cup for the first time, even holding Premier League side Spurs to a 1-1 draw, although their class told in the replay as I lost 5-1. Spurs went on to win the cup.
Key Transfers

Remember that loan signing from last season,
Kyle Wilson? Well, he scored 3 goals in 3 starts, so I liked him enough to buy outright from Crewe. He would become my top scorer in the 2nd season, and is still in the squad now. Still no money to spend, but the signings did include another two players who had once played for Arsenal: goalkeeper
Michael Jordan, and forward
Graham Barrett, whom I signed and fielded as a right winger. Youngster
James Smith would quickly break into my team and become an important figure at right back.
Meanwhile...Everton and Newcastle both went straight back up, and Chelsea took the title. Two of the cup finals were identical to what happened in the real world: Arsenal vs Chelsea in the League Cup (although Arsenal won this time), and AC Milan vs Liverpool in the European Cup (Milan won, thus denying Liverpool a third successive win).
I'll continue this soon with season 3, where I attempt to build a promotion challenge around a strong backbone, and bring South American class to the midfield...