His bleak analysis came after poor performances in European competition this season, a negative trend that means Italy will lose a fourth Champions League qualifying spot to Germany in 2012/13 after being overtaken in the UEFA rankings.
"Italian football has a very big problem," Gandini told Reuters in an interview. "There is disaffection among fans about going to grounds and more and more are watching games on television.
"Maybe Italy will have to change its role and become more of a second-tier league than one of the top three in Europe," added Gandini who is also vice-chairman of the European Club Association.
While Serie A's TV income will rise 20 percent this year to more than one billion euros thanks to a new collective rights sale, crowds have been on the decline with half-empty stadiums a common sight.
The average attendance last season was 24,603 - less than Germany's Bundesliga (42,441), the English Premier League (34,150) and Spain's La Liga (27,699).
"The problem is the opportunity to increase revenue and turnover," said Gandini. "We have a fairly good TV contract even if the centralisation of rights penalises top clubs.
"We have good, though not exceptional, commercial revenues but very poor matchday revenues from the stadium, concessions, and merchandising. There is a huge gap between Italy and especially England and Spain."
Serie A's tag as the sick man of European football was brought into sharp focus last year by Deloitte's Money League where Italy's top earners AC Milan ranked eighth.
In 2005 a total of three Italian clubs - AC Milan, Inter Milan and Juventus - were among the top seven.
CHAMPIONS LEAGUE
Performances on the pitch have waned too.
While the 2003 Champions League final featured AC Milan and Juventus, this season only Inter's last-gasp heroics against Bayern Munich have kept the Tricolore flag flying in the quarter-finals.
AC Milan and AS Roma were eliminated in the first knockout round while Sampdoria failed to reach the group stage. In the Europa League Napoli were knocked out in the last 32.
"We've not been very good in the Europa League. German clubs have been excellent which has had a clear effect on the UEFA ranking," said Gandini.
"The reasons are probably because our clubs in the Europa League do not have enough depth in their squad to play in two competitions which comes down to a lack of matchday revenues.
"The ability to invest is key to bringing in the top players. We had all the best players in Italy back in the early 1990s and then there was an escape to Spain."
Juventus, whose matchday income has fallen since 2005, will move into a new 40,000-capacity stadium next season but AC Milan are staying put despite the revenue-generating possibilities associated with a new ground.
"We have no plans to have our own stadium," said Gandini referring to the ground share with Inter. "We have an agreement with the city of Milan for many years."
