The superkid is on the brink of making a first team debut with the Reds.
Warnock told the Independent: "Well, we would have loved to have held onto him, but we did not have any choice in the matter. When kids are that age you can't hang onto them once they decide to leave.
"In the end the club decided to negotiate with Liverpool and got £500,000 and some add-ons.
"If we had not we might have lost him for hardly anything - that's the risk with a tribunal, as I found at Crystal Palace when we only got £800,000 for John Bostock, who was older than Sterling and had already been playing first-team football. I feel they have to change the rules otherwise where's the incentive in developing your own players?"