Have you heard the one about how 'Sunday Business' has lost £30m in three years?

At the Barclay brothers' relaunched paper, they're not laughing any more. And the news is grim for Andrew Neil

The billionaire Barclay brothers, it is well known, do not have infinite patience. After losing more than £60m on their much relaunched and reinvented newspaper, The European, they eventually closed it in December 1998. Now, they are looking hard at the future of another high-profile, loss-maker in their portfolio, Sunday Business.

A make-or-break relaunch earlier this year was supposed to deliver Sunday Business from a desperate two-year low in its circulation – which crashed nearly 30 per cent in a year to 53,000 in the spring.

But, in practice, it has been a grim summer. The relaunch resulted in an impressive glossy magazine with nice pictures of Jimmy Choo shoes and erudite articles on fine wines, but there has been barely a blip in the sales figures. And advertising revenue has been an absolute disappointment.

Official circulation figures released last week add to the gloom. While the headline circulation in August was 52,520 – a slight increase on a year ago – this includes many discount offers and full- priced sales are a miserable 23,799, about the same as The Hartlepool Mail. Nobody is admitting it in public, but Sunday Business's accumulated losses are now close to £30m and breakeven is nowhere in sight.

Understandably, the mood on the paper is not jolly. Earlier this year a number of senior staff walked out of the Barclays' publishing business. Former Express editor Sue Douglas quit the group to join Condé Nast, and Sunday Business news editor Frank Kane left to join The Observer, taking two top reporters with him. Other Sunday Business journalists continue to tout around for jobs elsewhere.

Those close to the paper say there is a sense of drinking at the fabled last chance saloon. A new television marketing campaign is about to start, and the figures between now and November will be crucial. If there is no substantial improvement by then, the Barclays might decide against risking losses mounting to European-style proportions. In practice, a sale of Sunday Business seems likely. But closure is not impossible, either.

Much depends on Aidan Barclay, the fortysomething son of Sir David Barclay and nephew of Sir Frederick. Aidan is chairman of Press Holdings, which also owns The Scotsman and Scotland on Sunday. The strategy for the papers and their management fall within the remit of publisher Andrew Neil, the former editor of The Sunday Times. But it is Aidan Barclay who is sitting in judgement on Mr Neil and reporting back to Sir David and Sir Frederick. "Aidan does not have a passion for newspapers," says an associate of the Barclays. "His interest in them is as businesses. It would be the same if they were cake factories."

In that respect he is unlike his father. Sir David Barclay has in the past taken a strong editorial interest in Sunday Business, and is seen as more tolerant of losses. Whether or not Sunday Business is sold could, in the end, rest on a family discussion of whether running a tight business should take precedence over the traditional non-financial pleasures to be gained from newspaper ownership.

From Aidan's point of view, Sunday Business might be seen to be living on borrowed time. According to the original business plan, £20m was to be invested over a three-year period and breakeven should have been reached in February.

Instead, the Barclays have been forced to put in another tranche of cash, with nothing but losses on the horizon. Originally Sunday Business needed a circulation of 80,000 to go into the black, but that figure is now higher – thanks largely to the cost of producing a glossy magazine. The cost base has undoubtedly soared.

One City cynic dismisses the idea of a sale: "Who would buy it?" he says. "The paper never found a market. It didn't make a profit in a boom. How can it possibly make money when times are tough?"

But that is too simple. The economics of Sunday Business may not add up for the Barclays, but could prove fine for a larger newspaper group – and Aidan Barclay has had offers. Associated Newspapers, publisher of the Daily Mail, is a possible buyer. Another is Rupert Murdoch. He has long envied Pearson's ownership of The Financial Times, and has been complimentary about the editorial credibility that Sunday Business has achieved on a small budget.

A bigger newspaper group might easily close the expensive magazine, absorb many of the overheads and distribution costs and merge advertising sales. Sunday Business has just outsourced its ad sales to the Telegraph group but, as one analyst puts it: "That's not the same as saying to advertisers: look we can do you a deal with The Sunday Times as long as you take out an ad in Sunday Business."

At the very minimum the paper needs to recreate some of the verve it had at its 1998 launch. Back in 1997 Sunday Business was bought by the Barclays for a reported £200,000 after an original version, set up by the maverick publisher-journalist Tom Rubython crashed. Rubython's Sunday Business had a reputation for unpaid bills and unreliable reports – and, in effect, the Barclays acquired nothing more than bad will and a little bit of infrastructure.

The Barclays' launch editor, Jeff Randall, turned the paper's image around totally, producing a run of scoops and gradually lifting the circulation from around 35,000 to more than 75,000 in February 2000 when he announced that he was quitting in favour of television stardom as the BBC's business editor.

His successor, Nils Pratley, is also a highly regarded journalist but, as one rival City editor puts it: "At the beginning Jeff and Nils were the strongest journalists on the paper. Now Jeff has gone, Nils spends all his time fire-fighting."

These are nail-biting times for Mr Neil, whose relationship with the Barclays, along with his credibility as a publisher, is under scrutiny. He presided over the failure of The European, which had a 75,000 circulation (at best) when it closed. He has also been much criticised for last year's price-cutting strategy on The Scotsman, which caused sales to soar from 80,000 to 100,000. The snag was that when the price went up again, the sales collapsed. The circulation figure for August was a mere 87,000 – a 16 per cent fall year-on-year.

Part of the problem for Sunday Business is that, like The European, it does not seem confident of its place in the market. On the one hand, it is a niche publication aiming to be a must-read for the City. On the other, it realises that to make a profit it needs a wider appeal. Hence the magazine and the Jimmy Choo shoe pictures.

Perhaps that would be fine if the FT were not already doing shoes, girls' tailoring and the pleasures of de-stressing in a huge and successful way every Saturday. Something plainly needs to fall into place for Sunday Business – and quickly.

The problem for the Barclays is that the market is falling away from them. A sale a year ago might have allowed them to recover their £20m-plus investment and make a small profit. The consensus in the City is that the brothers, and Aidan, would be lucky to achieve anything like that now.