He said: "I'm sure the plight of Leeds will now become a warning to every club trying to overspend in the pursuit of success. Whenever you listen to disgruntled Liverpool fans talking about the team and what they see as a poor season, the most common solution is always spending lots of money on new players.
"The Chairman at Anfield has been getting some criticism over his running of the club, but it's worth pointing out how soundly run the club has been, especially after what has happened at Elland Road.
"The Chairman has spent a lot of money in support of the team, but over the years Liverpool have been very shrewd about how much they've invested. They have spent what they can afford.
"There's no doubt we could have signed Rio Ferdinand from West Ham or Robbie Keane from Inter Milan by borrowing more money, but Liverpool rightly wouldn't risk financial ruin.
"The fans should bear in mind that it's all very well talking about speculating to accumulate, but when it goes wrong it's a slippery slope, as Leeds have sadly shown."