It was a bad deal, but Özil held all the cards. No one could have guessed he will quit as a footballer and just leech the money.
Wenger said that player of Özil's caliber will cost 100 million (plus of course wages), so I'd guess that was part of the thinking process, along with not making Arsenal look like every star will leave.
In hindsight I'd hope that Özil being here might have helped attract Auba at the time, for some consolation.
The problem is that even Özil at his very best (2015) didn't warrant that contract. You only pay that sort of money to goalscorers that win matches on their own imo.
All round it was just a terrible bit of mismanagement from that charlatan Gazidis.