NRL club Newcastle has announced a $1 million turnaround in its finances, but has still posted a loss of $244,000 for 2008.

Increased sponsorship and drastic cuts to their overheads have combined to deliver the improved result, which was boosted by average attendances increasing from 16,500 in 2007 to 19,000 in 2008, the Knights said in a statement.

"It's been a year where every aspect of our business has received a complete overhaul," chief executive Steve Burraston said in the statement.

"But we still face a number of challenges moving forward, particularly over the next two years during the stadium redevelopment period.

"I don't think any loss can be expressed as a good result, but a million dollar improvement in 12 months is certainly a satisfying one.

"Our sponsorship continues to grow and we are keeping a tight lid on our expenses but in a reduced capacity stadium, with significantly less corporate properties available this year, 2009 is probably more difficult than the last year."

The result comes as the Knights continue mediation with the Hunter Venues Authority over a default notice for $792,000 in unpaid rent.

The club is reportedly one of the NRL's most financially challenged and the Newcastle Herald has reported they have accumulated losses totalling more than $2.5 million since 1988.

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