Hiring Bill Curry and giving him too long of a leash.
Not going to argue that hiring Curry wasn't a mistake but there's a little more to it. While at Alabama, Curry had Don Lindsey as DC and Homer Smith as OC. At the time they were recognized as two of, if not the best, coordinators in the business. When hired Curry wanted to bring them to UK but Newton balked at paying them what they deserved.
Rumor at the time was they flew into Lexington, Newton picked them up, drove them around town/campus, met briefly in Newton's office and then Newton drove them back to the airport, put them on a plane and they were gone forever. Lindsey eventually went to Arkansas where he built top notch defenses on New Years Day type bowl teams. Smith went to UCLA where he developed top offenses, top players on top teams. Curry, dealing with Newton's leftovers, could only hire first time OC/DC with disasterous results.
Yes, Curry was a bad hire but Newton hamstrung him from the get-go.