Liverpool have spent nearly £200m in the last two summer transfer windows but have failed to finish in the top fourGetty

Liverpool legend Phil Thompson has identified the reasons for the Reds' lack of progress despite spending heavily in the last two summer transfer windows. The Merseyside club have spent nearly £200m ($284m) on transfers in the last two seasons bringing in 19 players to Anfield.

Despite the heavy investment in the squad, the Reds failed to qualify for the Champions League this campaign, and are likely to miss out yet again as they are currently seventh on the Premier League table, eight points behind Tottenham Hotspur, who occupy the final Champions League qualification spot in the fourth place.

Thompson, who has won three European cups with Liverpool, believes that the signings made by the club have hindered rather than help take the club forward. Anfield favourite Thompson, also believes the club have missed out some key signings during the ongoing transfer window to help further their chase for a place in the top four.

"We spent a huge amount of money in the summer but buying so many players didn't help us, it hindered us. I'd rather use the whole transfer budget on three top quality players. We need to add some star quality to this squad," Thompson told Mirror.

"Aside from [Christian] Benteke, we've not got an out-and-out striker. They were trying to fill that void with [Alex] Teixeira but that's not going to happen until the summer. They should have signed Charlie Austin. It's a case of needs must, and for the price Southampton paid he would have been worth a gamble. And he's a Liverpool fan."

Liverpool have missed out on some high-profile signings in recent seasons, with Alexis Sanchez opting for a move to Arsenal after being strongly linked with a move to Merseyside, while the report claims that Diego Costa also chose the bright lights of London over a move to the North West of England. The former Liverpool defender believes that the club should offer higher wages to attract top stars due to lack of Champions League football.

"We're lacking in the salary stakes. It's becoming more difficult to tempt players to Liverpool. They all want to go to London, even Manchester clubs are having problems. We have to start paying top money again. Our high earns have gone. [Steven] Gerrard was on at least £150,000, he's gone. [Luis] Suarez was on over £100,000 and he's gone," the Reds legend explained.

"Our top earner is now [Daniel] Sturridge. We may not have Champions League football again this season, we need to offer stuff to make people come here."