Walter Smith yesterday expressed his fears for the future of the Champions League after admitting that an elite group of super-rich clubs could strip the tournament of its credibility as a genuine competition.

The Rangers manager defended his Celtic counterpart, Gordon Strachan, in the wake of the Scottish champions' 3-0 defeat to Manchester United last Tuesday, but admitted that the financial gulf between the Old Firm and the top sides in England has grown beyond all measure in the last decade.

Smith conquered Leeds United in the Champions League in 1992-93 during his first spell as manager at Ibrox, but he feels that the disparity in resources has moved on, not just from that time but also from his own time as a manager in the Premier League with Everton.

“The gap between England's Premier League and our own has been like that for years,” Smith said. However, in a week in which Barcelona won 5-0 away to FC Basle in the Champions League, Smith confessed that the competition was in danger of becoming too predictable. “Yes, I am worried about that, it is the biggest danger.” the Rangers manager said.

“It is not just the about level of finance that some clubs have, it is the levels of debt that they can carry. You could easily have two teams in the Champions League finals who are millions of pounds in debt. If you look at the game since the mid-1990s, it has been finance-based. Celtic and Rangers have more money than the rest of the teams here and are always at the top of the league and winning championships but it is the same in all the countries around Europe.

“For years now, Manchester United, Chelsea and Arsenal have dominated the title. The only team outside the big four down there to break into that category was Everton a few seasons ago. That's the way it is in European football, apart from Germany, which seems to be the most competitive league of all because the Bundesliga has different laws about the amount of money a team can owe.”

Celtic were undone at Old Trafford by goals from Dimitar Berbatov and Wayne Rooney, who cost £60million between them, about six times the cost of Strachan's entire side. When asked if he sympathised with Celtic's plight, Smith said: “I don't feel sorry for Gordon Strachan, I feel envious of him because I would rather be playing in the Champions League with Rangers than out of it.

“Manchester United have the finances that allow them to put out a great team even when they have players injured - it's been that way for years. When you play in the Champions League, you just have to accept that if you meet United on a good night, that is what can happen.” However, Smith felt the criticism of Celtic for losing 3-0 - a result that was described as “embarrassing” and “men against boys” by Paul Ince, the Blackburn Rovers manager - was excessive.

“There is a big gulf between Manchester United and a lot of teams in the Premier League - people forget that,” Smith said. “A lot of the English teams suffer the same fate. Scottish teams do the best they can. But football throughout Europe is like that as well. You don't see many teams from small countries getting into the latter stages of the Champions League.

“There has been an exaggeration about the effects of Celtic's defeat. They've still to play them at home and they beat United there last time - they have beaten most of the teams they have played there. Scottish football is not in a desperately poor situation just because Celtic lost 3-0 to a team who can probably beat any team in Europe 3-0.”