Referee Carlos Batres booked Smith before Juventus striker Vincenzo Iaquinta coolly slotted home, ignoring New Zealand's apparent attempts to match Italy's gamesmanship by trying to delay the kick.
Replays did suggest referee Batres was correct to order a retake - and the prayers of Valdez, who was on his knees just outside the penalty box, were answered when Alonso saw his effort saved and Spain failed to score.