Simeone is overseeing the final six months of Torres' career with Atletico, having admitted he is unlikely to request the striker be handed a deal for next season.
Valdano told El Transistor: "It's a situation twice complicated for Simeone because he has to manage the end of a player's career.
"Something similar happened to me with (Emilio) Butragueño and I. We also suffered those problems, I had to fire a legend and also a player who had been my teammate, even a roommate.
"There comes a time when things end and although one tries to lengthen the path of a legend, this is relentless and if you want to remain competitive sometimes you have to keep making decisions that hurt both the public and the player."