The Uruguayan signed a new long term contract worth a reported £200k a week in December, and McManaman believes he is set to honour it despite continued interest from Arsenal and Real Madrid.
“I think he will stay. He’s signed a new contract,” McManaman said.
“It’s important for superstars to play in the Champions League every week. It is the over-riding fact that they want to test themselves against the best players.
“Liverpool are on the right track. If they finish suddenly finish sixth in the league there will be question marks but if they win the league or second or third and are in the Champions League there won’t be any assumptions about whether he stays or goes.
“He will stay and it will be up to Liverpool whether they want to sell him rather than the other way round.”
Liverpool closed the gap on league leaders Chelsea to just one point after a 2-1 win over Sunderland last night, and McManaman believes they can challenge all the way in the title race.
“They have got real strength in depth,” headded.
“Like Arsenal everybody was expecting Liverpool during March to drop points but they go to Old Trafford and won, go to Cardiff and won and suddenly everybody starts to think that they are quietly chipping away.
“It would be great if they did but it will be hard with Man City at Anfield, Chelsea at Anfield.
“Anybody who has been involved with Liverpool does not expect miracles this year. You don’t expect to jump from seventh last year, 20 points behind Manchester United, to winning the league.
“You just want progression and we have had it in bucketloads this year.
“If Liverpool can qualify for the Champions League without having a qualifying game, finishing first or second, that would be even better.
“If they win the league that would be incredible.”