The Magpies have made a woeful start to the season and are still to record their first league win.
The Magpies currently occupy 19th position in the Premier League table and have just three points to their name seven games into the season and Waddle - who appeared 170 times in his five years on Tyneside - thinks the standard of players they are able to attract is not what it once was.
"It's not easy, and the days have gone when they can spend and compete with the big clubs in the transfer market,” said the 54-year old, in quotes published by ITV Sport.
"They're buying players for £10million, £12million, £13million, but to a lot of clubs that's peanuts, let's be honest. They work to a certain budget and you get a certain quality player.”
It’s reasonable to expect a better return considering Newcastle’s financial outlay but, of the four big-money arrivals, only two have really performed consistently.
Chancel Mbemba and Georginio Wijnaldum have quickly established themselves as shrewd acquisitions but Aleksandar Mitrovic’s hot temper has barely allowed him time on the pitch. Even then, Wijnaldum has admitted to struggling to adapt.
Florian Thauvin has so far given no hint that he is an upgrade on the departed Remy Cabella and a major turnaround in form is required from the 22-year old.
Despite his doubts over the quality of the summer arrivals, however, Waddle believes there is hope yet for Steve McClaren and his men.
"But, if Steve McClaren can get them organised, if he can get the confidence in them, they've got a chance then possibly of getting up the league."