Leading article: Black days for English football

However it ends, the transatlantic courtroom drama that has engulfed Liverpool Football Club this week has already been a shameful episode in the history of English football. One of the most famous names in world sport has been dragged through the courts by two Americans desperate to avoid the club being sold from beneath them by their own bankers.

There should be no doubt about why Liverpool's destiny is being decided in the courts of law rather than, as it should be, on the football pitch: Liverpool is bust. The club's owners cannot afford to pay the £238m they owe to the Royal Bank of Scotland. What we have seen this week is a squabble over the financial carcass of a once proud sporting institution.

The Royal Bank of Scotland took effective control of the club seven months ago when Liverpool's co-owners, Tom Hicks and George Gillett, failed to pay back their debts on time. The bank has attempted to sell the club, for nothing more than the value of its debts, to the American financier and sports investor, John W Henry. Messrs Hicks and Gillett have sought to frustrate this process through the courts in London and Texas.

If a sale does not take place the club faces being placed into administration, which would result in a disastrous nine-point penalty. And what are the prospects if the sale to Mr Henry does go through? The club's debts would, we are told, be substantially reduced. But Mr Henry is no lifelong Liverpool supporter, bound to the club through historic loyalty. Liverpool will have merely exchanged two mercenary foreign owners for another one.

How did it come to this? There is plenty of blame to go around. It must encompass David Moores (Liverpool's previous owner who sold out to Messrs Hicks and Gillett for a fat profit), the two incompetent Americans themselves and also the Royal Bank of Scotland which lent the pair the money to complete their foolish leveraged buy-out in 2007.

But the greatest blame must lie with the Premier League. What has befallen Liverpool is just one entry in a long catalogue of derelictions of duty by the league's governors. Over the past decade the Premier League has allowed English clubs to be acquired by a succession of dubious characters and financial predators. It has failed to ensure a reasonably level financial playing field across the league. The game's governors have shrugged their shoulders as sugar-daddy owners have pumped in money to buy quick success, putting immense financial pressures on smaller clubs that have attempted to compete. They have sat back while clubs have squandered vast television revenues on ludicrous transfer fees and grotesquely-inflated player wages. The majority of Premier League clubs are now running unsustainable losses and several have mortgaged their futures with staggering recklessness.

The lesson from the judicial torments of Liverpool supporters this week is that England's clubs need to be in the hands of the only individuals who have their long-term interests at heart: their fans. Germany has shown that this is possible. The Bundesliga authorities demand that all clubs are majority-owned by member associations and they are forbidden from spending profligately on player registrations and wages. This framework has delivered competitive football, reasonable ticket prices, profits for clubs and financial stability across the league.

The idea of implementing a similar structure in English club football has long been dismissed by the complacent and arrogant individuals who run the domestic game as a romantic dream. But supporters are beginning to wake up to the fact that something is rotten in the laissez-faire Premier League. Better a romantic dream, many now say, than the present financial nightmare.