Three years ago Davies took Derby to the top flight via the play-offs but, with his hands tied by a lack of investment, he quit after winning just six points in 14 games. And he warned Newcastle they need to splash out if they are to survive and compete at the top level.
"They'll be facing a very difficult task," he said. "When Derby went up, Tottenham were a very good Premier League side and they spent £50m on top of what they had.
"Newcastle are different from other clubs who've been promoted because of where they come from. They're already sitting here with a budget that exceeds X amount, with a squad depth that has huge experience. But they still need to spend and, as a greedy manager, I think at least £40m for the first window and £20m for the second.
"But they have very good experienced players: Gutierrez, Enrique, Ameobi - you can go through the team. They are better equipped than others and are a different animal - an animal ready-made for the Premier League with a Premier League infrastructure, but it will need an injection of new players.
"They deserve great credit for getting into the Premier League but they know that it takes huge spending to compete."