Liverpool owners must learn to spend big says Ray Houghton

Liverpool owners Fenway Sports Group are being urged to spend big to return the club to the Champions League after the club's top four hopes were left in tatters following defeat to Arsenal.

The Reds are seven points adrift of fourth place Manchester City with seven games left following back-to-back losses to Manchester United and the Gunners either side of the international break.

Such struggles come amid confirmation that Liverpool winger Raheem Sterling has rejected a new £100,000-a-week contract, which has drawn further scrutiny over the club's wage structure.

Former Reds midfielder Ray Houghton told the BBC World service: "The owners are going to have to try and do something about it. Whether they are willing to, only time will tell. Liverpool are not in that area when it comes to actually spending and paying out on wages. They can only bring in a certain calibre of player. That may have to change if they are going to really be competitive to win the league and be competitive once they get back into the Champions League."

Liverpool signed nine new players during a record-breaking summer of spending estimated at £117m, a spree which included the signings of Adam Lallana and Mario Balotelli who have both endured difficult first seasons at Anfield.

Only United, who broke the British transfer record to sign Angel di Maria, spent more than the Merseyside club during the summer while Brendan Rodgers' side were also big spenders during the 2013 summer window.

"I don't think Liverpool can compete with Manchester City, Chelsea and Manchester United when it comes to paying wages," Houghton added.

"You look at some of the players at their clubs reputedly on £250,000 to £300,000 a week. Liverpool can't pay that. I think that the highest-paid player is Daniel Sturridge and I heard that figure is about £150,000 a week."