Gerrard is a season ticket holder at Elland Road and has followed their ups and downs over the last few years both professionally and as a genuine fan.
"The atmosphere in Leeds was like a morgue at the weekend," Gerrard told BBC Sport. "This season has really hit the city. I've had a number of e-mail messages from fans this week, it's all doom and gloom.
"The major mistakes were made in May 2001 but the seeds of that were sown earlier," said Gerrard of the summer which saw Leeds borrow heavily.
"But a number of people would track the problems back to the signing of Rio Ferdinand for £18m earlier that season. The signings of Seth Johnson (£7m) and Robbie Fowler (£11m) in 2001 were madness.
"If the current owners lead us into Division One, it will be a nightmare. Everyone knows they don't have the money and the players that will come in to replace the likes of Smith, Viduka and Robinson will be cheap journeymen.
"But if there is a takeover in the next few days or weeks, and enough funds are provided, then we would have a chance of coming straight back up. But objectively, I can't say: 'We would definitely come straight back up'."