Tottenham Hotspur are powerless to compete in a transfer market inflated by Manchester City and the other members of last season's top four, according to Harry Redknapp. The Spurs manager is eager to add to his squad and retain key players, notably Luka Modric, but he has been frustrated as other clubs invest heavily before Uefa's financial fair‑play rules come into force from 2014.

Spurs have signed one senior player this summer – the 40-year-old goalkeeper Brad Friedel on a free transfer – and while funds have been made available for transfer fees, the club's strict wage structure has held them back. Their £22m bid for the Valencia winger Juan Mata on Friday may only bear fruit if Spurs remain sole bidders. Redknapp joked: "We were interested in Sergio Agüero but he wanted £250,000 a week in wages. We were only £220,000 short."

Redknapp's concern is that after missing out on Champions League football this season, the club's situation will only worsen as they struggle to match Chelsea's and City's cash resources, or Arsenal's and Manchester United's ability to generate funds through vastly bigger stadiums.

"You're looking to be a top‑four team and it's difficult; we can't pay the wages that those clubs pay basically," the Spurs manager said. "The chairman [Daniel Levy] runs the club well, you get 36,000 people, you're not going to put the club in hot water.

"I think the wages have gone crazy. That is the problem. It's gone beyond all belief in the last little spell. We're well set up for financial fair play but it doesn't help when you look at what you're up against. It's like when you're a kid and they give you the most improved player of the year award – you're useless."

Warding off interest in the club's leading players has also proved to be a challenge. Interest in Gareth Bale has been tentative but is expected to increase over the next year, but Modric's future has been hotly debated over the close season.

A throat infection kept the Croatia playmaker out of Spurs' 3-2 friendly win over Brighton & Hove Albion on Saturday, although Redknapp is optimistic that Modric will remain a Spurs player beyond 1 September.

"Obviously Chelsea have made it plain they wanted Luka but we want to keep him, and I'm sure we will," he said.

"I think we will bring one or two more players in, too. The chairman's trying, desperately. So we might get a bit stronger. But you know [Sir Alex] Ferguson has come out and said that there are five teams in [the title race]. What's he including? He didn't mention Tottenham, and probably with what Liverpool have brought in that's the way it will be."