Redknapp, who was in charge at Upton Park from 1994 until 2001, claims the club made a huge mistake in selling home-grown stars like Rio Ferdinand, Frank Lampard, Joe Cole, Michael Carrick and Jermain Defoe between 2000-04, when Terry Brown was the club's chairman.
The Hammers earned more than £46million from the sale of the quintet but Redknapp said: “Four players who grew up at West Ham — Ferdinand, Lampard, Joe Cole and Carrick — played in last year's Champions League Final. It makes you upset when you think they should all be playing for West Ham.
“West Ham have great support and they should have held on to those players. They could have built a team around them which would have challenged regularly for a Champions League place.
“From the fans' point of view, it was a big blow to see them all go. None of them cost the club anything and, if they had stayed, who knows where West Ham would be now? Until that crop came along, West Ham hadn't produced many good young players since Paul Ince came through the ranks in 1986. Those five all became great players.”
The current West Ham squad contains youngsters such as Mark Noble, James Tomkins, Jack Collison, Freddie Sears and Junior Stanislas, but Redknapp said: “They are not in the same class. No one will have five British kids as good as that lot again.”