SOARING wage bills and disappointing performances on the field are being blamed for a dramatic fall in profits at Newcastle United.

Pre-tax profits almost halved - down from £8.8m to £4.5m in the year to July 31 - according to interim figures released to the Stock Market yesterday.

City analysts say the falling profits can be attributed to the team's under-achievement on the pitch in a season in which the team finished 14th in the Premier League, costing it millions in merit payments worth £500,000 a place.

Concern was also raised that the club's wage bill, which has now topped £50m, was reaching worrying proportions.

Wages now represent 58 per cent of turnover, while most industry experts consider a 50 per cent figure to be the point at which a club needs to take action.

The figures released yesterday do not include high-earners such as Michael Owen, Spanish international Luque or Turkish midfielder Emre signed during the close season.

One City analyst said that while the financial figures were broadly positive and the outlook good, the wage bill would be a cause for concern if the club's investment in new players did not produce a return to Europe within the next two seasons.

He said: "The club is paying top six wages and the squad has under-delivered.

"If they return to the top six, turnover will go up accordingly and the figures will look much better, but as things stand the under-performance of the team has made the percentages look poor."

Turnover fell by four per cent from £90m to £87m, in part due to falling television revenues, which were down by 17 per cent.

Chairman Freddy Shepherd remained upbeat about the financial results. He said: "The bottom line is we have made a profit. We aren't happy with the size of the profit, but it is a profit. The league position was a big factor."