The former forward thinks this weekend's Premier League clash is the biggest since the loss to Chelsea last season.
The Reds travel to the Emirates on Saturday, in the Premier League’s early kick-off, with both sides embroiled in the fight for the Champions League places.
The Gunners are better placed than their rivals though, sitting third in the table just one point behind second placed Manchester City and seven behind leaders Chelsea, although just one point ahead of fourth-placed Manchester United.
In contrast, Liverpool sit fifth in the standings, five points behind Manchester United who beat them 2-1 at Anfield just before the international break. Now, Collymore believes this game is as big as last season’s clash with Chelsea.
“For me, the trip to Arsenal on Saturday is Liverpool's most-important game since the home Premier League defeat by Chelsea last season,” wrote Collymore.
“If Liverpool lose, the impact will be a fifth-placed finish in the league at best, which would mean no Champions League revenue next season while Anfield is being redeveloped.”
The Champions League is the competition that many of Europe’s top players want to play in, proving to be a powerful tool when it comes to negotiations with potential transfer targets.
And Collymore is worried that not qualifying could negatively impact on his old side, especially in terms of recruitment, with big clubs likely to target their players and potential signings turn down moves to Anfield if they are not guaranteed to be competing on the grandest of stages.
“I just worry that not being in the Champions League every season will see England's most successful club in Europe become a secondary option for transfers,” added Collymore.
“It will also mean bigger clubs snooping around the likes of Philippe Coutinho, Daniel Sturridge and Raheem Sterling.”