The Italy striker is back in the Premier League after 18 months at AC Milan and Anfield boss Brendan Rodgers will be hoping to get the best out of a player who scored 20 goals in two-and-a-half seasons at Manchester City, but was also sent off three times.
Liverpool will be the fifth club that Balotelli has played for by the age of 24 and Sky Sports pundit Neville says top teams will not want him if he fails to live up to his potential at Anfield.
“When he starts games, his goal ratio has been pretty good,” he told Monday Night Football.
“They are getting a goalscorer. They needed somebody else up there with Daniel Sturridge. They can’t compete on all levels and not have another presence.
“I have to say he played at City, who were the champions of England at the time, AC Milan is a great club and he played for Italy and the demands that Cesare Prandelli put on him. He has played under pressure in the last few years.
“This is his last chance at what you would call a big club and he has got to deliver.”
Balotelli won a Premier League medal in 2011/12 at Manchester City, but was offloaded to AC Milan by Roberto Mancini in the following season.
And while Neville says he has proved his ability on the international stage, his attitude needs to improve if he is to be a success at his new club.
“When you’ve got these maverick players, you’ve always got to weigh up the positives that they bring against the negatives,” he added.
“Certainly in Manchester last time and particularly in his second season, Roberto Mancini was having to make different rules for him. There were a lot of good players in the squad and he was having to move players out of position.
“He became a massive distraction to the whole club and the whole squad. It was constant all the time.
“If he settles down, I have got in the back of my mind Euro 2012 when I slightly changed my mind. I didn’t rate him that much at Manchester City, but when he played against England against Ashley Cole and John Terry down the left side, he was absolutely fantastic.
“If he can produce that level of performance consistently, he has got a player - but he needs to get rid of the rubbish that existed the last time when he was at City.”
Former Liverpool defender Jamie Carragher has played against Balotelli and agrees that Rodgers has taken a risk by signing the player.
However, he says the fee represents good value in the current transfer market.
He said: “Looking at the situation Liverpool were in, they needed a striker and you’re getting the Italian number one striker for £16million.
“Look at the prices. Ross McCormack in the Championship went to Fulham for £12million, so in terms of business I think it’s good business from Liverpool, but there has got to be a worry signing Balotelli.
“There’s a reason he costs £16million and has moved so often within his career already. That is a problem for Liverpool.
“If we see the Balotelli of Euro 2012, then I’d say it’s a great signing, but I don’t want to see the Balotelli we saw at City in a Liverpool shirt; petulant, stupid sendings-off, walking about…
“I played against him two or three times and he did nothing in the game. You knew if you got tight to him and put him under pressure, he’d fall out of the game. We’ve got to see more than that.”