Serie A teams, struggling with dilapidated stadiums and domestic economic problems, are falling behind their Spanish, English and German rivals in terms of spending power and no Italian team has gone beyond the Champions League quarter-finals in the last three seasons.
Juventus coach Antonio Conte said recently that it could be years before the trophy returns to a Serie A club.
Gandini was more optimistic, saying it would be wrong to write off Serie A teams this season.
"When you can't get the financial resources, you have to be smarter than the others, maybe like Italian football used to be in the past," he told Reuters during a meeting of the European Club's Association.
"That's maybe where we can still win. You have to work harder, you have to concentrate."
"The Champions League is a special kind of competition and there are so many factors which come into play," he added.
"It's not just about the financial situation of the clubs, you've got other things which can make a difference....injuries, loss of form, a bit of luck," he said, adding that last season, Milan had the misfortunate to be on the wrong end of Lionel Messi's best performance of the competition.
"Last season, we beat Barcelona at home (2-0) but then Messi re-appeared in the second leg....it was by far his best performance in the knockout stages."
Gandini said that Serie A teams were aware of the new reality and had made a conscious effort to balance the books during the recent transfer window.
"I think the clubs have appreciated the situation, they are aware of where they stand," he said. "It's all the more difficult because of the economic situation of the country."
Napoli have been by far the biggest spenders, splashing out on Gonzalo Higuain, Jose Callejon and Raul Albiol, but it was all made possible by the 64 million euro sale of Edinson Cavani to Paris St Germain.
AC Milan went through a difficult transitional season last term after offloading a number of seasoned players in their attempt to balance the books and bringing in young players such as M'Baye Niang and Stephan El Shaarawy.
Gandini said that lack of stadium ownership remained the biggest obstacle to growth in Italian football.
Juventus are the only top flight club to own their stadium while the others use municipal arenas, a system which inhibits investment and prevents clubs from obtaining additional sources of revenue.
"This is a very, very important matter, we are aware that most of the difficulties are linked to our stadiums," said Gandini.
"There are difficulties with building regulations and difficulties in getting special laws approved by the parliament," he said, referring to possible financial incentives for clubs to build stadiums.
The Italian stadium issue is something of a vicious circle as clubs cannot afford to build or buy stadiums in their current financial situation. Yet, without their own stadiums, finances are unlikely to improve.
Italy's failure to win the right to host the 2012 and 2016 Euros was a missed opportunity as the government would have made money available to help clubs or local authorities.
Gandini said there were also smaller details such as poor lighting and empty seats near the pitch, which gave a poor impression to watching foreign audiences.
In the midst of all this, there are some things which Gandini believes Italian football still does very well, starting with its treatment of players.
Players such as Robinho, Zlatan Ibrahimovic and now Mario Balotelli, who have been involved in controversies in other countries, have managed to largely keep out of trouble during their stays with Milan.
"I think that the players understand that when you come to a club like AC Milan, they are very well taken care of and they can concentrate on playing well for the club," said Gandini.
"They are part of the Milan family. Players who have been at Milan always have a very special relationship with us, (even if) they stay here for just one, two or three years, they always feel they are part of the club."
- Sports & Recreation
- AC Milan
- Serie A