Mike Ashley's Newcastle is fast approaching the break-even point after reporting an operating loss of £3.9million.
The Magpies, who lost £33.5million in 2009-10 and £37.7million 12 months earlier, reduced those figures to below £4million after amortisation in 2010-11, their strongest financial showing for several years.
Significantly, wages accounted for 60.6% of a turnover which rose by 69% from £52.4million to £88.4million, where in 2008-09, the season they were relegated from the Barclays Premier League, the ratio was 82.7%.
Managing director Derek Llambias said: "The club's financial results for the year end June 2011 are extremely strong.
"We can now count ourselves amongst very few clubs across the UK and Europe who are operating at close to break-even.
"What is particularly pleasing is that we have achieved this whilst also ensuring we have a strong squad sitting firmly in the top third of the table and currently pushing for a European place.
"Some of the key financial principles we set in place when Mike bought to the club back in 2007 are now beginning to reap rewards, most notably our adherence to a strict transfer policy which avoids, or limits wherever possible, the acceptance of dated payments for players bought or sold.
"We believe it is a far healthier financial model to settle full transfer fees for players up front, not dated over a period of years.
"We have dealt wisely in the transfer market and reinvested the income received from player sales into improving the squad."
The net cash spend on player transfers, including Andy Carroll's £35million departure of Liverpool in January last year, was a receipt of £5.4million, although the Magpies have since invested a further £25million in transfers and wages.
In addition, when Ashley took over the club in 2007, it owed £36million in deferred payments for players; the club is now owed £5million.
Newcastle have also cleared all of their third-party debts, which amounted to £76million in 2006-07, and its borrowing from Ashley in terms of interest-free loans remains at £140million.
Llambias said: "Our net cash spend on player transfers to June 2011, which includes the sale of Andy Carroll, was a receipt of £5.4 million, with a further £25 million in cash spent on transfers and players' wages since June 2011.
"We have also worked hard to address an inherited wages-to-turnover ratio which was unsustainable. Wages now account for just over 60 per cent of turnover and we feel this is a healthy and affordable level.
"A further significant achievement has been to clear all of the club's interest-bearing debt, which in 2006/7 was costing £6.5million a year just to finance the debt.
"Mike Ashley continues to provide loans totalling £140million interest-free, for which we are extraordinarily fortunate. Once again, Mike has not taken any money out of the club."
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