The former right-back, who is a pundit on Sky Sports, was speaking during Monday Night Football on television.
Neville and his co-host Jamie Carragher ran through the signings United have made since 2013, saying only a couple of them have been successes.
"It's become a graveyard for football players, this football club. Where players are considering whether they even come to the club. They can't get players in," Neville told Sky Sports.
"I have to say, where I got to the point on Saturday [after the 4-0 loss at Brentford] on moving away from the players, when a school is underperforming, getting poor results regularly over a period of time, they get put in special measures by government.
"The kids don't get blamed. That's where Manchester Untied are, it's special measures and you can't blame the kids anymore."
He added: "It's been one of the problems that Manchester United have had for 10 years. They've flip-flopped between managers and allowed managers to influence overall recruitment, that's been a massive issue.
"We looked at the last 10 years of major signings at the club, £1.25bn has been spent.