Celtic have also had two Champions League campaigns under O’Neill, including this season, and were agonisingly close to qualifying from the group stage on both occasions.

Hoops fans have now become accustomed to European nights against famous opponents and O’Neill made it clear he will have to spend heavily if the club is to move on to the next level.

He said: “We have had a collection of players who have been around for the last three or four seasons and it has been very, very good.

“But Henrik Larsson will be leaving at the end of the season and there might be a few other changes.

“It is not only about trying to get replacements but getting replacements of quality. That is the thing that stands in the way of any aspiring club – and we are in that category.

“We have had some fantastic games in Europe and taken some great scalps and that brings its own demands.

“The demands come from the supporters, who will be wanting a bit more – and a bit more.

“You don’t want to just occupy a position in the Champions League. You want to really contest it and have a go.

“That is not to say we haven’t done that in the last three years – we were three minutes away from the last 16 this year – but you want to be going with a realistic chance of competing against the champions of France or the German champions.

“That is what the fans are looking for and I think the whole club is.

“I accept the fact that in today’s financial climate that is difficult but this is where we have to balance things up.

“The financial climate in general is not that clever but certainly up here in Scotland it is pretty difficult.

“I always think there is a danger of any club resting on its laurels. Sometimes you have to invest a lot just to stand still.”

Last night’s defeat by Villarreal was inflicted at a time when injuries had robbed O’Neill of key players.

Chris Sutton, Alan Thompson, John Hartson, John Kennedy and Shaun Maloney were all absent through injury, forcing O’Neill to fill the bench with youngsters and fringe players.

O’Neill said: “This season and last season, including qualifying games, we have played 31 games in Europe.

“That is nearly a season in itself – a lot of matches. This season, the team is going to end up playing about 60 competitive games.

“The truth is that this year we haven’t got the biggest squad in the world.

“Now that is our problem more than anybody else’s but when you are contemplating a lot of matches then I think you have to have the wherewithal to be able to do that.”