Redknapp said snubbing Chelsea's £22million bid for Croat Modric, 25, has fired a warning to world football.
"I have seen that sort of thing before. West Ham decided to sell Rio Ferdinand and then all of a sudden they all seemed to go. That's no good for any club.
"Tottenham need to keep their best players as well as add more quality to the squad if they want to mount a serious challenge for the title.
"Other top clubs raise the bar all the time and Spurs must keep pace. It's as simple as that."