"I came here with no budget at all to work with and I was told that from the outset, they had money but it had already been spent," he claimed.
"But that was three-and-a-half years ago. We have obviously taken out a lot of players - something around the mid-30s, I think, in the time I've been here, so we've actually made some money as well. A lot of those players, we sold.
"But the chairman, Freddy Shepherd, has provided the club with a lot of money over the last three years when you think of Hugo Viana, Jermaine Jenas and Laurent Robert, of course, we've bought Andy O'Brien, we've bought Craig Bellamy, just to name a few.
"We've now spent a sizeable amount on Jonathan. The chairman has put his money where his mouth is and he's provided me with a sizeable chunk of money that we've speculated on.
"We've restored the club, we've turned it around and I can only pay my respects to the chairman and the board. We have made a little money, but they've found money," he continued.
"The Champions League has helped, naturally, but he's trying to run a tight ship, he's sensible and he's got a plan in his head. He's trying to work within the confines of that financial restriction, and he's doing very well.
"For him to find this sort of money at this time, he's a very supportive chairman. He's ambitious, he wants Newcastle to be the best.
"He knows we have a little bit to go and I told him 'it won't be through a miracle, it will be through investment. That means money. We'll identify the players, can you find the money?', and in Jonathan Woodgate, that's what's happened."