Ben Chu: How English football lost its mind

I grew up in the shadow of two giants. Their names were Old Trafford and Maine Road.

The respective grounds of Manchester United and Manchester City football clubs (until the latter moved to Eastlands) were an equal distance from my home in the suburbs of south Manchester. It was, if you like, a choice between the red devils and the deep blue sea. I chose red. It was a happy marriage. And I expected it to be a lifelong attachment too. But then an American family called the Glazers came along and ruined everything.

In 2005 they borrowed at least £650m from banks and hedge funds to buy all of Manchester United's shares and then loaded that debt on to the back of the club itself. It's known in the business world as a leveraged buyout. As far as I was concerned, the business world is where it should have stayed. This formerly profitable and debt-free club would be paying tens of millions of pounds every year merely to service the interest on these massive loans.

So what was the plan? There was talk of huge untapped possibilities for commercial expansion in Asia and abundant new sources of profit. The problem was that we already had a substantial fanbase in the Far East; Old Trafford was the biggest stadium around. And anyone who had ever been in the Old Trafford "megastore" knew that the previous owners had hardly been shy of flogging merchandise.

Could the Glazers really increase the club's revenues enough to service the interest, invest in the team and pay off the debt? What if their access to cheap borrowing dried up? I remembered the fate of Leeds United, one of our great rivals, who had overborrowed, underperformed on the pitch, desperately sold players and finally sunk like a rock through the divisions. I wasn't going to sit passively while my own club risked the same fate.

So I joined the anti-Glazer Manchester United Supporters' Trust and went into a form of self-imposed exile from my club. For years, friends – including many fellow United supporters – were baffled at this stance. Why worry about what's going on in the boardroom, they asked, when the team is doing so well on the pitch? When I explained that I thought the Glazers were imperilling the very future of the club, they looked at me as if I'd lost my mind.

Well, now reality has hit them like a Wayne Rooney free kick in the back of the head. Earlier this month the Glazers managed to issue £500m in bonds to replace some of the club's existing high-interest debt. But to attract new debt-investors they needed to provide considerable detail about the club's finances. And that detail was not pretty. Since that 2005 takeover, the club has paid at least £260m in interest and £120m in fees and other costs. Today you could buy half the Premier League for that kind of money. Worse, the Glazers have taken £22m out of the club in management fees and personal loans. And the total debt is still rising, having just breached the £700m mark.

Even once blinkered supporters can now see that the Glazers have been a financial disaster for United. And this bond sale doesn't solve the club's debt crisis. It merely postpones it. Thanks to the Glazers, United are treading water to stay alive. If they don't keep winning tournaments regularly, if they don't keep increasing merchandise revenues by tens of millions of pounds every year, if they don't shift those expensive corporate hospitality seats for home matches, if television rights don't keep shooting ever upwards, the whole house of cards will fall.

Sad for United, you might say, but so what? My argument is that this sorry story of what has befallen one of our most romantic sporting institutions is a symptom of a crisis facing almost all our top-level football clubs: reckless ownership, financial profligacy and complacent regulation. If you think sport matters at all in our national life, then you should be concerned.

Mainly thanks to lucrative television rights deals, Premier League football has never earned more money. But virtually all the top clubs are making losses. Liverpool are in an even worse situation than Manchester United, having been taken over in a still more reckless leveraged buyout deal. And some clubs are already in advanced financial crisis. Portsmouth are on the verge of going under. West Ham's finances have been described by their new owners as a "car crash". And all that stands between a host of other clubs and bankruptcy are wealthy (and sometimes not so wealthy) owners who subsidise their losses. Despite all this, there has been no restraint in paying players grossly inflated wages. Indeed, Manchester City continue to drive up costs across the league as their Abu Dhabi oil sheikh owner seeks to buy instant success by splashing out ludicrous amounts on players. There is a word for all of this: unsustainable.

Yet there seems to be no appetite among clubs or regulators for the kind of reforms that are needed to end the madness. The proposals of the Uefa President, Michel Platini, to bar entry to the Champions League to teams that engage in "financial doping" are still widely seen as a foreign plot to undermine the supremacy of English clubs in Europe, when they should be embraced as an excuse to return to sanity.

There is another way. The German Bundesliga has a good model which might be emulated. No club there can be owned outright by a single individual and there are penalties on clubs that try to fund on-field success through unsustainable debt or persistent losses. German football fans enjoy the lowest ticket prices in Europe and the clubs generally turn a profit.

Last weekend I attended a game between Hertha Berlin and Borussia Mönchengladbach at the Olympic Stadium in Berlin. Despite the minus 10C temperatures, some 46,000 fans turned out. German teams might be going through a fallow period in the Champions League at the moment, but is it really the case that we have nothing to learn from them?

It might have been freezing in Berlin, but the climate looks far worse here. Clubs face, on the one hand, a future of chronic financial instability and, on the other, the risk of sudden collapse should those foreign sugar daddies lose interest. Now it's football as a whole that finds itself caught between the devil and the deep blue sea.

b.chu@independent.co.uk