Paul Newman: United's demise has city rivals steeled for life in the third tier

The Football League Column: Until 1975 neither of the Sheffield clubs had played outside the top two divisions

It is the Christmas holiday of 2006 and the two Sheffield clubs are playing their last matches of the year. United record their fourth win in just over a month by beating Arsenal 1-0 at Bramall Lane as Neil Warnock's men find their feet in the Premier League.

Wednesday, meanwhile, beat Barnsley 3-0 to take their recent run to eight wins in 12 matches. With Brian Laws' team on the fringe of the Championship play-off places, Wednesday fans are starting to wonder whether they might just be playing their old rivals in the Premier League the following season.

That period five years ago was by no means one of the highest points in the histories of two of English football's most established clubs – both, after all, are former League champions and FA Cup winners – but their supporters would love to be in those positions now.

Twelve months after Wednesday were relegated to League One, United suffered the same fate on Saturday, meaning the Steel City's two clubs will compete together next season in the third tier of English football for the first time in 31 years. In the 1979-80 season, when they last met at that level, the two derbies drew gates of 49,309 at Hillsborough – Ian Mellor, father of Wednesday's current leading marksman Neil, scored one of the goals in a 4-0 home victory – and 45,156 for a 1-1 draw at Bramall Lane.

Until 1975 neither of the Sheffield clubs had played outside the top two divisions, but since that time their supporters have been on roller-coaster rides up and down the tables. United even spent one season (1981-82) in the fourth tier, while Wednesday's lowest point came with a five-year stint in level three from 1975. United were in the top flight from 1990 to 1994 and again for one season in 2006-2007. Wednesday's last match in the Premier League was 11 years ago.

Wednesday spent heavily in an attempt to preserve their Premier League status and paid for it over the next decade. Milan Mandaric's takeover last year has brought promise of a new dawn, while a mini-revival in recent weeks under Gary Megson – who made nearly 300 appearances for the club in the 1980s – suggests that Wednesday could be promotion contenders next season. Megson was appointed manager in succession to Alan Irvine in February.

United, meanwhile, admit they have been spending too much money in attempting to win back their Premier League place. Having announced losses of £18.6m for the year to June 2010, the Blades, who have one of the highest wage bills in the Championship, are preparing major cuts as they drop down to the third tier for the first time for 22 years.

The club issued a statement on Saturday night recognising that there had been too many changes of personnel since relegation from the top flight four years ago and too great a reliance on expensive loan signings and players on short-term contracts. "The club has to hold its hands up and acknowledge that we got it wrong," Trevor Birch, the chief executive, said.

United, who finished third in the Championship only two years ago, have been in turmoil almost the whole season. Kevin Blackwell lasted only two matches as manager, while Gary Speed was in the job for just four months before leaving to take charge of Wales. Micky Adams took over at the turn of the year, but United went 14 matches without a win between December and March.

After Saturday's 2-2 draw at home to Barnsley had sealed their fate, Adams said he did not know whether he would still be in charge next season. "I think there'll be a meeting of minds and I am sure that everything from top to bottom will be discussed," he said.

"Today is a low point, devastating, but I want to be the manager that brings the club back this time next season to the Championship. The implications of relegation will be felt and there will be a certain amount of cutting your cloth accordingly, so it will be an interesting summer."

Adams was straightforward in assessing why United had been relegated. "We've not been good enough," he said. "We have to share a collective responsibility for the woes of the season. I'll take my responsibilities. The players have got to take theirs too."