In 2002, for the second successive season, Leeds United failed to qualify for the Champions League.

What followed beggared belief. Heavy debts, a succession of disastrous signings and poor managerial appointments ensued.

One by one, their best players left, as though England's Premier League clubs were systematically indulging in asset-stripping from Elland Road.

And, having got themselves into a hole, Leeds just kept digging until they had reached the depths of League One, with the added burden of a 15-point deduction.

The catalyst was missing out on the riches of the Champions League at a time when they were spending heavily.

It is a spectre that should haunt Liverpool. For the Reds have the same symptoms, though very different causes.

Their expenditure is that of a club accustomed to Champions League football. But they are in a six-club fight for that lucrative fourth place, which can be worth up to £30 million (S$85 million) a year.

The 'Big Four' could be reduced to a 'Big Three' if Liverpool fail to overhaul Everton.

With an 18-month, £350 million refinancing deal - even though the club are responsible only for £100million of the borrowing - co-owners Tom Hicks and George Gillett have encumbered Liverpool with an annual £18 million bill to the Royal Bank of Scotland.

Part of the cause is in Stanley Park. The need for a new stadium is not disputed. It is the cost that endangers Liverpool.

Arsenal's Emirates Stadium cost £357 million but, because of rising steel prices and the weakness of the American dollar against the British pound, the new Anfield is now projected at £400 million. It could cost even more and a further loan, estimated at £300 million, would be required to complete the ground.

While a 71,000-seater ground would almost put Liverpool on an equal footing with Manchester United, their fiercest rivals' match-day income is around £1million higher per game.

But the theory of short-term pain for long-term gain fails, if Liverpool cannot recapture a position in the top four.

In the meantime, a Catch-22 situation beckons: needing to finish, at worst, fourth for the European riches, but having less to spend without those riches.

Liverpool possess a larger fan base, both in England and worldwide, than the mid-table teams.

But, at a stroke, that advantage has been cancelled out.

Take away £18 million a year and it damages the transfer budget, dents the wage bill and deters world-class managers accustomed to being granted money.

Then there is the context within the English club. Debt-free clubs, or those with generous benefactors, such as Tottenham, Newcastle, Manchester City and Aston Villa, would be able to out-spend them.

Portsmouth and West Ham might even do likewise.

Then it becomes an uphill task to qualify for Europe, let alone the Champions League. Then trophies become a rarity. Then fair-weather fans might start to desert them.

So, too, might the players.

Whatever the verdict on Rafael Benitez's tenure, most of the squad signed because of the Spaniard.

Now that his future is in doubt, Liverpool run the risk of losing their prize assets and without a Plan B if he goes, following the embarrassing exposure of the Jurgen Klinsmann talks.

As Steven Gerrard pointed out this week, off-field problems are affecting the dressing room.

Unless Javier Mascherano is offered as a £17 million peace offering to both Benitez and the fans, the Argentinian will leave in the summer.

Then there is Fernando Torres. Wanted at Inter Milan last summer, coveted by Manchester United in previous years, the club- record buy chose Liverpool because of Benitez.

Take away Torres - as plenty would like to do - and Liverpool barely have a forward line.

There would be questions, too, about the Reds' three other Spaniards - not to mention Ryan Babel, who once stated his intention to join Arsenal.

Peter Crouch and John Arne Riise are already attracting attention elsewhere.

In a time of transfer-fee inflation and a dual squeeze on the Liverpool budget - plus uncertainty about the manager's position - even their departures could be telling.

It is the sort of situation where a generous owner would commit, or divert, further funds.

But Liverpool's seem unable to agree. Gillett, thought to be the more supportive of Benitez, did not accompany Hicks to sign the refinancing package.

Instead, the Texan, in desperate need of popularity, issued a statement backing the manager, but many fans have yet to be convinced.

Unlike Gillett, billionaire Hicks is wealthy enough to buy Liverpool outright, but he prefers leveraged buy-outs. That has caused the club's debt and, in turn, the annual interest repayments.

That has reduced spending, unless the two Americans believe further investment could make a dramatic difference to the club's income or value.

If, as many believe, the club were undervalued when sold, their profit could be maximised given that Manchester United are worth more than £800 million.

But they would not be if they were not ever-presents in the Champions League, a status to which Leeds once aspired.

They represent the worst-case scenario.

No one expects such a dramatic decline at Liverpool.

But, as Leeds know, momentum can carry a club downwards very quickly.

stsports@sph.com.sg