Ian Herbert: Cut dead wood and learn from Sir Alex

What must the Liverpool manager do now to revive his team? Here is a five-point plan that should help...
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1. Loan signings in January

Are needed badly. No one could begrudge Sami Hyypia his decision to leave Liverpool for one last pay-day at Bayer Leverkusen this summer but Liverpool have paid for the lack of cover. Sotirios Kyrgiakos, even at £1m, has been an error of judgment and taken with the vulnerability of Martin Skrtel (who cost only £500,000 less than United paid for Nemanja Vidic) it all adds up to one of the worst defences in the Premier League at combating set pieces. It's not just about the height lost by the sale of Peter Crouch and Mohamed Sissoko but a fundamental failure to attack the ball. Without much money, loan signings seem the most probable route to better defensive options. David Ngog's five goals underline his promise but Liverpool need a second striker, too. Alberto Aquilani's 39-second cameo in Budapest was bizarre. When will he be fit? Mahamadou Diarra and Rafael van der Vaart are midfield players Real Madrid may be willing to release.

2. Line up equity partners, and fast

Benitez's activity in the transfer market has had its flaws and he has certainly been given money – total gross spend: around £250m. But the net spend is around £80m and having been forced to sell to buy for some time he is now operating on a zero net spend basis. That puts him at a disadvantage to most of the Liverpool's direct competitors and only the club's search for £100m new equity partners will change that. If the club's confidence that these can be found proves justified, work can begin on the new stadium which will increase match-day revenues and allow Liverpool to occupy the same commercial territory as Manchester United. Liverpool believe the stadium can increase their current £40m annual profit to something like the £90m profit United enjoy, if not more. To put things in perspective, they have £240m debt against the £700m reported by United's UK-based parent company, Red Football Joint Ventures Ltd, in April.

3. Remove malignant forces from the dressing room

Benitez needs players who can stand up and be counted. The timing of Ryan Babel's comments that he did not understand his training methods was abysmal and it is time to forget the early excitement of hiring a player who was one of Europe's great prospects when arriving for £11.5m from Ajax in 2007. If Liverpool recoup half of the money paid out for him, it might give the manager something to play with. Andrei Voronin's miserable autumn suggests that he, too, is not worth the wages which could be spent on a useful loan signing.

4. Deliver results in January

There was a mood of disappointment at Manchester City yesterday about Liverpool's exit from the Champions League. The feeling around Eastlands is that Benitez will now focus on reaching fourth place in the Premier League, a position that City covet. But Liverpool want to win the Europa League and the sides fielded may not be as weak as some imagine. Their chances of having a serious tilt at that trophy will be greater if they can capitalise on a comparatively easy six-week period in between their two league matches against Arsenal on 13 December and 9 February 2010. Opposition such as Wigan, Portsmouth and Wolves, plus Stoke and Wolverhampton return soon after, provide the chance to re-establish a top-four place. The same six-week period is also straightforward for City, though.

5. Take a deep breath

Take courage from Sir Alex Ferguson. Ferguson found himself in a worse place than Benitez is now when defeat at Benfica's Estadio da Luz left United bottom of their Champions League group and out of Europe in December 2005. Roy Keane had left the club three weeks earlier and Chelsea were flourishing under Jose Mourinho. But Ferguson remained calm. He hired Vidic for £7m and Patrice Evra for £5.5m the next month and trusted in United's youth – Wayne Rooney and Cristiano Ronaldo were 20 and Darren Fletcher 21. Benitez would need to sell to find even £5m in January and his youth ranks don't compare. But he has as many world-class players – Fernando Torres, Steven Gerrard, Glen Johnson, Daniel Agger, Pepe Reina, Yossi Benayoun – as Ferguson did back then. United went on to finished second to Chelsea in the top flight that season and have taken the title for the last three years, to go with the 2008 European Cup.

'League is our main priority now'

Liverpool are confident that elimination from the Champions League will not affect their search for new equity partners to take a 25 per cent stake in the club and raise £100m for investment in the new stadium which is integral to their business model.

Managing director Christian Purslow said in the immediate aftermath of Tuesday night's game that Liverpool's performance in Budapest and the bitter disappointment of watching the last five minutes of Lyons' defeat to Fiorentina on a TV monitor had underlined qualities which were a source of pride to the club and transcended the idea of Liverpool's "brand" being devalued by elimination. "I don't know what that word [brand] means," Purslow said.

"As a team – a bunch of heroes who had to torture themselves watching a sterile last five minutes in Italy – they're very disappointed. The manager feels the same, as a fan I am very disappointed. The impact on finances is negligible this season, but we are focusing on how disappointed we are."

Rafael Benitez's side are now intent on winning the Europa League. "We're in the Europa League and we'll go and try to win it," captain Steven Gerrard said.

Javier Mascherano said a return to the top four in the Premier League was the priority. "We know that in the league we have got to start to win again because we are not in the top four," he said. "We need to start winning games and we know that we have got a very important game against Everton [on Sunday]. We need to win it."

Ian Herbert