Sweatshirt jackets have a reputation for being ill-fitting.  One of the places to adjust the fit is at the shoulder.  After removing the sleeves and bottom ribbing, try on the body of the sweatshirt.  Pin up the shoulder seam until the bulkiness around the armholes is reduced.  To accomodate the full sleeve, lowerthe bottom of the armhole by the amount you took up at the shoulder.  Or you could narrow the sleeve to fit the new space.