The Spurs boss thinks the sale of Gareth Bale meant they could never realistically qualify for the Champions League and issued an ultimatum with his future at the club uncertain
Spurs beat Aston Villa 3-0 on the final day of the Premier League season to secure sixth place and Europa League football next season, but the 45-year-old believes the club was wrong to ever consider themselves as contenders for a Champions League spot, let alone a title bid.
Goal revealed last month that Tottenham have decided to replace Sherwood this summer, and the 45-year-old has stated he either needs a contract extension or will leave White Hart Lane of his own accord to manage elsewhere.
"[The hype] was ridiculous," he told reporters. "We're talking about taking out one of the best players in the world in Gareth Bale and replacing him with seven players who have never ever played in this competition previously.
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"The club will be better with those seven players next season, because they will have had a season playing in this competition, the experience of it, and they will improve from it.
"But to take out a real match-winner - eight winning goals [Bale] scored last season, 21 goals; Jermain Defoe, 10 goals; Clint Dempsey, eight goals - look at all the goals you are taking away. What are you replacing them with?
"You're replacing him with [Emmanuel] Adebayor who didn't get a start, who wouldn't kick a ball for the club until I took over, and he was the only proven Premier League goalscorer that we had, and [Roberto] Soldado, who is going to take time to settle.
"It's impossible to start thinking about wining the championship, or even top four. As much as I don't want to pour water over it, that's a fact.
"If you talk to people who know, it's impossible. We've qualified for the Champions League once - once. We've got no divine right to qualify for the Champions League.
"Where we finished for the Europa League - in sixth - is where we should be, and where we are. We all want to aspire to be in the top four and win championships, be we ain't getting there at the moment."
"We ain't getting there with what we've got, and to remove a match winner like Gareth Bale out of that squad, then we shouldn't have expected it."
Asked whether he needed a new contract, Sherwood stated: "I think that's very difficult [to manage a team with a one-year contract] because you're in the same situation again, aren't you? You're a supply teacher.
"Iit can only be that [a new deal or a departure]. It will be interesting to see how I've been judged. If I'm to leave, it can't be on results. If I knew it was only five months I wouldn't have done it, to be perfectly honest.
"I think [a quick decision] makes sense. I haven't spoken to Daniel [Levy] about what the future holds, but if I knew any more I'd tell you.
"I think it's a 59 percent win ratio in the Premier League and if I had started the season [as manager] we'd be in the Champions League.
Sherwood was philosophical when asked if the match would be his last in charge, saying: "If it is, life goes on. There were no tears shed out there. This club means a lot to me, but if I'm not to continue here as a manager, I'll be somewhere else."