A consortium led by Charles Green failed to win any votes in their application to join the Scottish Premier League after purchasing the liquidated club's assets in June 2012. The Rangers newco was subsequently admitted to the bottom tier, despite attempts by Scottish football authorities to parachute them into the First Division.

Much ill-feeling remains among Rangers fans over those times, while many other supporters feel Rangers got off lightly for years of contentious tax arrangements, which remain the subject of legal action.

Smith, who was promoting enhanced odds from betting firm comeon! for Sunday's William Hill Scottish Cup semi-final between Rangers and Celtic, said: "There was no necessity for Rangers to be put down into the Third Division.

"That will always stay in Scottish football. There will be a bitterness in the Rangers ranks. It will be a massive motivation for the club. It would certainly be for me.

"How can they forget what happened to them? Nobody could forget that.

"There is no doubt it was the wrong move in my eyes: Scottish football has been worse off.

"And a lot of the teams who were happy to see Rangers going down there have suffered and found themselves relegated or in the process of being relegated."

Green and others face criminal charges over the 2012 purchase, and Smith believes Scottish football is still facing consequences of subsequent decisions.

Smith, who led a group that tried to buy the club from Green immediately after the newco deal, said: "Rangers going out the Premier League has, in many ways, caused problems to quite a number of the teams that have been there. And Celtic are one of them, in the sense that they have been left more or less alone to win a championship.

"Aberdeen put up a great fight over the last couple of years but it's very difficult for provincial teams to match Celtic, or Rangers when they were at the level they were at five years ago.

"Celtic have had a problem with their own motivation going into games. They have not had Rangers on their coat-tails. I don't think their spending has been what it was, and quite rightly: why spend the money when they don't need to?

"It doesn't matter what anyone says. When I was Rangers manager, you were motivated by Celtic. Your first look after each game was to look to see what their result was.

"That's a massive motivation to take away and I think Celtic have suffered a bit from that in their performances."

Smith believes Sunday's Hampden clash will offer little indication of what will happen next season and he urged the Rangers board to find money to strengthen.

"Rangers will have to support Mark Warburton in the manner I was supported as manager, to give him the opportunity to challenge," said the 68-year-old, who won 21 trophies in two spells as Rangers boss.

"The board want the club to be up there and they have to find a way of doing so.

"The economics of Scottish football are fairly straightforward for Rangers and Celtic. If you invest in your team and get to the Champions League, you make money. If you don't, you lose money.

"That's the biggest gamble. Rangers are in a totally different circumstance from Celtic, but they have to find a way.

"It can be done. We weren't in a great circumstance when I came back a second time. We weren't in a great circumstance when Graeme Souness took over 30 years ago.

"The club showed a reaction at that time and I'm fairly sure they will show a reaction now."