Speaking to talkSPORT, Cottee opened up on the appointment of Lopetegui which saw former manager David Moyes leave the club at the end of his contract.
"There's been a change of manager, we all know that. It was a big gamble by the club, and I said that six months ago. I'm not just saying it now because things haven't gone well, but I felt it was a big gamble in the first place.
"It wasn't my choice of manager to take over the club, but I'm not in charge.
"So you respect their opinion and you give them the benefit of the doubt. But I think it's been a very, very tough start to the season, a very slow start to the season."
Moyes took the club to new heights and his departure shocked many fans including Cottee, who thinks the club would be in a much different position under the Scotsman.
"I think with the sequence of events that began with the club winning the Conference League in June 2023, where you can argue that the club was at a peak, the highest peak it's been for 43 years since they won the FA Cup in 1980. Everything was fantastic at the club.
"And then you lose your captain (Declan Rice), who signed for Arsenal. And the board, for whatever reason, decide not to renew the (Moyes') contract. And more importantly, let it run down, because that's where I've got a problem with what went on.
"You know, you either give the manager the reward that I felt he deserved, in other words, a four or five year contract, or you maybe look to change things there and say, look, we want to go in a different direction.
"We all accept that. But to just let the contract run down, it put everyone at the club in a difficult position. There was £130 million spent in the summer. We didn't need to spend it in the summer.
"We needed to spend it in the January window at the beginning of this year. And people forget West Ham were sixth. I'll say it again, they were sixth in the Premier League. They were in the Europa League and they needed squad replacements. They had to part ways with David Moyes because of what they created.
"Then to compound all that, you choose the wrong manager. So to say I'm an unhappy Hammers fan at the moment is an understatement."
- Get breaking football news faster with the new Tribal Football app! Download now on iOS and Android to stay ahead of all the latest transfers and football updates. Download now: App Store, Google Play