NEWCASTLE United's wage bill was identified as one of the most worrying in the country in a leading review of football finance that was published yesterday.

Deloitte's Annual Review of Football Finance showed that the Magpies' total annual wage bill rose by ten per cent in the 2006-07 season, the fourth-highest leap in the whole of the Premier League.

Only Chelsea, West Ham and Portsmouth recorded higher increases, with West Ham and Portsmouth making significant investment in their playing squad following the arrival of new owners.

Alarmingly, Newcastle's annual wage bill in the 2006-07 season rose to £62,475,000, the fifth-highest in the Premier League. The four clubs who pay more than them - Chelsea, Manchester United, Arsenal and Liverpool - can all rely on regular Champions League revenue to fund their expenditure but the Magpies, who will not even be competing in the UEFA Cup next season, boast no such safety net.

The increase in the club's wage bill came before Mike Ashley completed his buy-out of former chairman Freddy Shepherd, and underlines the scale of the financial problems the current owner inherited when he took over at St James' Park.

With the Magpies having been taken off the Stock Exchange last year, the exact ratio of the current wage bill in relation to total turnover is not known. However, it is estimated that Newcastle are currently operating at around 72 per cent, nine per cent above the Premier League average and significantly higher than the industry ideal of 50 per cent.

Sunderland's 2006-07 ratio was around 90 per cent, but much of that can be explained by bonus payments following the club's promotion. Middlesbrough's ratio of around 80 per cent is rather more worrying given the falling attendances at the Riverside last season, but the Teesside club's total wage bill remains around half that of Newcastle's.

Therefore, it is at St James' Park where the desire to reverse the current trend is at its strongest. Ashley is known to view the club's financial situation as unsustainable, and his number one priority is to reduce Newcastle's wage commitments over the next two years.

That explains his refusal to offer Michael Owen a new long-term contract on the same £110,000-a-week terms he currently enjoys, and the club's pursuit of younger overseas players who are unable to command the same high wages as some of their more established English rivals.

All 20 Premier League clubs recorded an increase in wages in 2006-07, and Deloitte sports business partner Dan Jones feels other chairmen will have to follow Ashley's more realistic financial model in the future.

"In 2006-07 we have seen double digit wages inflation, resulting in the highest wages/turnover ratio we have seen since the Premier League began in 1992-93," said Jones. "This has been a key factor underpinning a second consecutive year of falling operating profits, while pre-tax losses have reached a new high.

"Although some of this impact may be due to advance spending of future broadcasting revenues, and we expect the picture to improve markedly when the 2007-08 accounts are analysed, this is a familiar trend.

"We expressed our concern this time last year that player wages would consume most of the increase in revenue, with no improvement in profit margins. Current performance, and indications for 2007-08, suggest that this has indeed been the case.

"The improvement in cost control which would demonstrate a normal business culture of maximising profitability does not appear to be happening at the Premier League clubs."

Total revenue for the English Premier League clubs in the 2006-07 season amounted to 2.3bn Euros - up 11 per cent - with total wages increasing by 13 per cent.

The Premier League clubs' net debt figure at summer 2007 increased by 19 per cent to £2,469m. Manchester United's parent company posted a net debt figure of £605m, while Chelsea Limited, the parent company of Chelsea, recorded a net debt of £620m.

Championship clubs' revenues increased by three per cent to £329m in 2006-07, while League One revenues were unchanged at £102m and League Two revenues increased by three per cent to £63m.

Total attendances across the four divisions of English football reached 29.9m last season, the highest total since 1967-68.