Speaking exclusively to Football Insider, the former West Ham hitman admitted preparing for life in the second tier was a sensible move.
Newcastle have four points from their 10 Premier League games this season and are yet to win in any competition.
The Magpies failed to lay a glove on their opposition as they lost 3-0 to Chelsea on Saturday.
The club are currently looking for a new manager after parting ways with Steve Bruce on 20 October.
However, McAvennie claims even Jose Mourinho wouldn’t be able to improve this ailing Newcastle side.
“I think Newcastle are in real trouble,” McAvennie told Football Insider correspondent Ben Wild.
“You could give that squad to Jose Mourinho and he wouldn’t be able to get much more out of it.
“It is a Championship squad with one or two half-decent players. I just don’t see where that first win is coming from.
“These new owners have plans. I think they have to be drawing up a plan for the Championship.
“That’s the sensible thing to do because from what I have seen of Newcastle this season they have been truly awful.
“They can get new players in January but they could be 15 points adrift by then.
“There is only so much a new manager can do before they get their own players in.“
Newcastle are next in action against Brighton on Saturday.
They sit 19th in the Premier League table.