The former Magpies manager believes Mike Ashley's failure to run the club properly has been the key cause of their relegation.
Former Newcastle United manager Kevin Keegan has told BBC Sport that Mike Ashley "mismanagement" of the club is the primary reason for their decline, and insisted that the club's transfer policy has been misguided.
The Magpies were relegated for a second time in just eight years as Sunderland cruised to a 3-0 win over a hapless Everton at the Stadium of Light on Wednesday night.
Despite a late resurgence under Rafael Benitez, who has led the club to two wins and three draws from an uneaten run in their last five matches, the Tyneside club were beyond saving after a disastrous season.
Keegan, who managed the club to promotion to the Premier League and a subsequent finish as runners-up to Manchester United in 1996, believes the blame has to rest with owner Ashley for a series of poor decisions.
The 65-year-old told BBC Sport: "You have to say Mike Ashley hasn't handled the decision-making very well or he's given the responsibility to people and they haven't handled it very well.
"It is mismanagement from the very top. They bought players for the future but sometimes maybe you have to buy players for the present. It's all right having a few good young players from France but can they play in the Premier League now? If they can't - don't buy them or certainly don't play them.
"A few of them have found it very tough and the confidence goes and then even good players start to look pretty poor. They are going to have to go down and regroup. That's not going to be easy."
Newcastle spent over £50 million last summer on talent from abroad such as Georginio Wijnaldum, Aleksandar Mitrovic, and Florian Thauvin, but it became apparent that experiment was not working out as a success.
They attempted to address their situation by spending another £24 million on English pair Jonjo Shelvey and Andros Townsend before sacking Steve McClaren with 10 games to go, but by the time Benitez arrived at St. James' Park the majority of the irreparable damage had been done.