Liverpool legend Graeme Souness fears the club he holds so dear to his heart are in 'meltdown' after another yet home defeat in their wretched UEFA Champions League campaign.

Liverpool crashed to a 2-1 defeat at home to Fiorentina courtesy of Alberto Gilardinho’s injury-time strike to bring the curtain down on an appalling campaign in Europe this season.

The loss meant that Rafa Benitez’s men have now just won three out of their last 14 games in all competitions and have even failed to be seeded for the Europa League draw on Friday, December 18th.

The Reds have also endured a miserable league campaign so far and on the back of a poor showing against Blackburn last Saturday currently languish seventh in the table, a full 12 points behind table-toppers Chelsea and three behind fourth placed Tottenham.

Former Liverpool captain and manager Souness, who lifted three European Cups during his playing days with the club, believes that unless Benitez turns things around, the Reds are heading for meltdown.

"I fear they are in meltdown. If they don't reach the Champions League next year the best players won't want to play for Liverpool," he told Sky Sports.

"That would be the first time in as long as I can remember. They are hundreds of millions of pounds in debt and they need a new stadium to keep up with the rest and just stand still."

The tough-tackling Scot also stressed that it is all hands on deck in the club's bid to secure the fourth and final UEFA Champions League spot or else face the financial consequences, which may mean selling the likes of Fernando Torres.

"Every year they are dropping off the pace so they need a new stadium.

"If they don't get to the Champions League the banks will be knocking on the door wanting to replace the income stream that the Champions League would give them.

"All those scenarios are frightening for Liverpool supporters," he added.

When asked about Liverpool's chances of succeeding in the Europa League, Souness said:"The Europa League means nothing to Liverpool.

"I'm a Liverpool supporter and I would love them to finish in the top four and win the Europa League and FA Cup. But if there was a choice of those three it would be to finish in the top four."