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Saunders, who served under the Magpies during Graeme Souness's reign, warned against parting with Isak, declaring: "It's just like punching all the supporters in the stomach."
Speaking on talkSPORT, the former Wolves and Wrexham boss added, "Newcastle haven't really had a good transfer window...and losing Isaac is going to be a massive blow for them.
Liverpool has come knocking, and he's said to Newcastle, 'Right, I want to go.' The owners are so rich that they could say to him, 'Well, no, you're not going.
"Fans will be gutted because it's a great club, and they think that the club is going to climb to the top of the Premier League.
Despite the ongoing uncertainty, he maintained that the owners still have grand ambitions.
The Nigerian, who is serving as a club ambassador during the pre-season tour, said: "At the end of the day, this is football and when you are trying to mix it with the best teams, you are going to have great players that other teams want
They have shown that right from the get go, and that is not going to change.
"There are things happening in the background
We are really keen to communicate that the club are going to do what is best for the club.
"Myself, being somebody who has lived this since I was a kid, it is great to see that ambition
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