Ibrox side Glasgow Rangers are currently 11 points behind Celtic.
Rangers have failed to challenge Celtic in the Scottish Premiership since being promoted.
Mark Warburton’s side are already 11 points behind Celtic, and the Bhoys have a game in hand over their Glasgow rivals.
Nicholas feels that Rangers will need to make some excellent signings to have any chance of catching Celtic over the years ahead, but he worries that the Ibrox side will be unable to afford the investment required.
“Rangers are a good football side, but they sometimes over pass. Joe Garner has struggled to get the goals,” he said.
“The challenge for Rangers is to try and finish second. They are competing with Aberdeen and Hearts.
“They are a long way behind Celtic, and they are probably two decent players away from it. But the problem is that they don’t have much money.
“Warburton has done a decent job, but they need to add more quality. They’re a good side, but no better than that.”
Celtic are unbeaten in domestic action this season, and already look certain to claim their sixth title in succession.
Rangers, meanwhile, appear to be locked in a battle for second place with Aberdeen.
Rangers have steadily climbed up the Scottish Premiership table, after making a very slow start.
The Light Blues have won six of their first 13 top flight matches, but things have been difficult for Mark Warburton’s side so far.
Rangers are next in action this weekend, when they take on Partick at Firhill.