Only seven points separated the top four teams in the Championship this season, with Crystal Palace the only side to win promotion.
Smith said expansion had to be done in the “right way”.
“You can’t just make it huge straight away because you don’t want to lose the quality of it,” Smith added.
“It’s the one league in the world that everyone wants to be in right now, so that has to stay whilst making it bigger over a number of seasons in the right way.”
Smith said growth also had to come off the pitch.
Bristol City averaged 7,000 fans per game this campaign and will continue playing at Ashton Gate next season despite their return to the second tier.
“If you look at some of the top teams, they need new stadiums now because they’ve outgrown them,” Smith said.
“The game has grown so fast in such a short amount of time that the teams that are catching up and forcing to be up deserve to have a go at it – and that needs to open up a bit.”
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