Have you heard the one about the English Super League featuring Liverpool and Manchester United? It might sound like one of Ian Ayre's rib-ticklers, but it's already happened. If the big clubs want to form a breakaway competition of their own now, they're 26 years too late. It's been done.

English football was in the doldrums in 1985. 1966 was becoming an increasingly distant memory, 56 fans died in a fire at Bradford City's stadium Valley Parade and 39 Juventus fans were killed in the Heysel disaster, where Liverpool fans rioted before the European Cup final, which led to Uefa banning every English club from Europe for an indefinite amount of time. The financial implications were potentially disastrous. All things considered, this was not a good time to be English.

Six clubs, including Liverpool, had qualified for Europe for the 1985-86 season, but the ban rendered their efforts in the previous campaign immaterial and Everton, who were the league champions, were denied a place in the European Cup; to say they weren't best pleased with their Merseyside neighbours would be an understatement. Football fans don't forget. They still haven't forgiven them.

Not to worry though, because the Football League was soon to come up with a bright idea: instead of playing European football, the six clubs would instead take part in a domestic tournament called the Super Cup as a form of financial and sporting compensation. Everton would have been in the European Cup, Liverpool, Southampton and Tottenham had qualified for the Uefa Cup via the league and Norwich as League Cup winners, while Manchester United would have been in the Cup Winners' Cup as FA Cup holders.

For Everton, who could have been taking on Barcelona, Bayern Munich and Juventus, the prospect of playing Second Division Norwich instead was about as consoling as the family holiday in a Spanish villa being replaced with a summer-long stay in a cottage in Norfolk. It was little wonder that the tournament was scrapped after a year.

The teams were split into two groups of three with each side playing each other twice, before the top two from each group went through to a two-leg semi-final, followed by a two-leg final, a handy distraction when the league season consisted of 42 matches and the FA Cup and League Cup still meant something. Rumour has it that Everton and Liverpool were kept apart in the draw, meaning that Group 1 consisted of Everton, United and Norwich and Liverpool, Southampton and Tottenham made up Group 2.

Yet to the surprise of absolutely no one, the Football League initially struggled to find a sponsor for its brainwave. "For want of a better name, since they are yet to find a sponsor, they are calling it the Football League Super Cup," wrote David Lacey in the Guardian. "A sponsorship agreement with a leading brewers fell through this week which was perhaps just as well. No doubt the brewers were acting in good faith but would they really have wanted to be associated with a competition born out of a disaster which had followed a heavy day of drinking in Brussels?"

A solution finally came about, however, when the cable sports channel ScreenSport agreed to sponsor the tournament, thereby giving it a new name: the ScreenSport Super Cup, which sounds less like a serious contest between the country's top teams and more like a summer five-a-side tournament for ex-pros over the age of 50.

This was not an encouraging start. ScreenSport was launched as a standalone channel in 1984 and was bought by WH Smith in 1987, before eventually being renamed as The European Sports Network. The channel limped on and was finally shut down by its new owner, Eurosport, in 1993, by which time Sky already had a stranglehold on English football.

Interest in the tournament was not high, perhaps a consequence of the breathless league campaign that was unfolding alongside it, yet also because of the overall gloom surrounding the game. Clubs were in dispute with the BBC and ITV over money – games stayed off the box until the new year – and the threat of a genuine Super League loomed large.

Indeed the failure of the Super Cup to capture the imagination was used as an argument for why a Super League would not work. That said, it did lead to the equally pointless Full Members Cup, designed by the FA so every club could experience the Super Cup sensation, essentially a consolation competition for missing out on a consolation competition, but one that ran on six years after the original consolation competition had ended.

The game's authorities were full of ideas: at one point, as negotiations to stop a Super League rumbled on, the Super Cup was very nearly replaced by the British Cup, a competition for clubs in England and Scotland, but that never came to pass.

Before United's opening Super Cup match, the chairman Martin Edwards wrote in his programme notes that he hoped it would "only last for a year", due to a naive belief that Uefa might have lifted the ban on English clubs by then. His prediction was right, but he got no marks for the working.

Ron Atkinson's United set a blistering pace in the league at the start of the season and would have expected to breeze through their group, with Norwich the designated whipping boys. However their opening match at Old Trafford in September was against the champions, Everton, who gave them a firm reality check. United, who had won their first eight games, had beaten Everton in the previous season's FA Cup final thanks to Norman Whiteside's pearler, but the Toffees, out for revenge, got it in some style.

The early warning signs for the competition were there. Only 33,859 people were present, low by United's standards, despite what the Guardian called "a breathtaking spectacle replete with dramatic incident, subtle skills and half-a-dozen excellent goals". Four of which went to Everton, Kevin Sheedy scoring the pick of the bunch with a 25-yard screamer. Though United had not been demolished, Everton's teamwork and speed on the break constantly caught them out. The eight-point gap between the sides in the league suddenly looked anomalous.

The crowd United attracted against Everton was the largest managed in the group. In October, Everton made it two wins out of two by beating Norwich 1-0 in front of 10,329 hardy souls at Goodison Park, though the punters could hardly be blamed for staying away – after all, their side's manager, Howard Kendall, was just as bothered as them. "What a waste of time this is – out you go", was Kendall's Churchillian team-talk. What would Gareth Southgate have made of that?

Three weeks later, however, the group was turned on its head when Norwich won the return game by the same score to put the pressure on United. Yet due to the bizarre format, two months elapsed between United's first game and their next. At home against Norwich, they resisted the temptation to give Bryan Robson a run-out after injury, but needed Gordon Strachan to come on at half time and win them a penalty, converted by Whiteside, after Wayne Biggins had given the visitors an early lead.

By now United were in trouble. Four weeks later they travelled to Everton beset by injuries. "Before kick-off spectators amused themselves by compiling an all-star XI," wrote the Guardian's Patrick Barclay. "The qualification was that they had to be missing from the starting line-up for some reason or another. Super Cup indeed!" United's injuries bedevilled them to such an extent that Frank Stapleton had to play in defence and it was his own goal that settled the match for Everton, who finished top of the group with nine points.

Although United were growing increasingly apathetic, the Super Cup was attracting some attention in Norwich, who only needed to avoid a two-goal defeat in their final game against Atkinson's side to progress to the semi-final. At Carrow Road 15,449 fans were there to see Norwich effectively take on a reserve side, with the injuries continuing to pile up for United, whose lead at the top of the First Division had been whittled down to two points by Liverpool. Missing eight players when they left Manchester, United's task was made even more difficult when Jesper Olsen was taken ill on the team bus.

Norwich, who had lost once in 14 games, took the lead after nine minutes through Kevin Williams to leave United needing to score three without reply. With 19 minutes left, Colin Gibson equalised, but that was it; with only one point from their four games, United were out, not that they would have shed any tears. After all, according to the Guardian report, United "gave the ball away with depressing regularity and lacked inspiration", giving off the impression that they simply did not care.

No prizes for guessing who won the other group, though once again the attendances were low, with no game attracting even 15,000 spectators. In September, 11,549 saw Tottenham beat Southampton 2-1 at White Hart Lane thanks to two goals from the striker Mark Falco. It was Tottenham's lowest home crowd in any competition for 39 years. "We hoped for a crowd between 15,000 and 18,000 so it was a bit disappointing," said the manager Peter Shreeves. "But we certainly won't lose money on tonight's gate. Some of our fans told me they would boycott the game because they felt they'd been robbed of a European place."

The Guardian's reporter at the game, Robert Armstrong, noted that it would be a surprise if the visit of Liverpool later on in the group did not prove a draw. As it turned out, the crowd was even smaller, 10,078 attending a game that would decide the group winners. Perhaps it was down to Tottenham's poor form in the league. On the previous Saturday they had lost 3-0 at home to Nottingham Forest, and a clinical Liverpool side won by the same margin to finish top of the group.

Those who stayed away did not miss much from Spurs, who were blown away by a Liverpool performance of "coordinated skill and finishing power". Though the score was 0-0 at half-time, Liverpool moved up a gear after the interval, so much so that sandwiched between two Ian Rush goals was a 40-yard solo run from Mark Lawrenson which he polished off with a low drive past the 40-year-old Pat Jennings, making a short-lived return after an eight-year spell at Arsenal.

Liverpool were comfortable throughout the group stages. They beat Southampton and Tottenham 2-1 and 2-0 respectively in front of minuscule crowds at Anfield, and their only dropped points came away to Saints, who held them to a 1-1 draw in early December. That at least salvaged some pride for Southampton, whose fans delivered a damning verdict on the competition when 4,680 saw them crash out by losing 3-1 to Tottenham at The Dell in December. It was no wonder that Patrick Barclay wrote witheringly of a "so-called Super Cup" and Lacey spoke of Everton, Liverpool, Tottenham and United "grubbing around" in the competition.

After the group stages, though, only Everton, Liverpool and Tottenham were left grubbing, with United free to concentrate on their unravelling title challenge. The semi-finals, to be played over two legs in the new year, were Tottenham v Everton and Norwich v Liverpool, but interest remained low, particularly from the Spurs fans, who seemed to be on a mission to stick two fingers up to the competition at every opportunity. At the start of February, an astonishing 7,548 fans trundled into White Hart Lane to watch Spurs draw 0-0 with Everton in the first leg of their semi-final. Imagine that for a genuine semi-final.

Of course, this was anything but. On the same day, 5 February, Liverpool drew 1-1 at Norwich in the first leg of their semi-final. Due to heavy fixture congestion, they played the second leg at Anfield on 6 May – a waiting period which makes the Europa League look lean and mean – by which time Liverpool were at the business end of a manic title run-in and also had an FA Cup final against Everton to look forward to. There was no suggestion that they would take their eye off the ball against Norwich however, and goals from Kevin MacDonald, Jan Molby and Craig Johnston secured a 3-1 win and their place in the final.

Everton only had to wait until March to play the second leg of their semi-final at Goodison Park, where they finally did Spurs a favour and beat them 3-1 in front of a whopping 12,008 supporters to set up an all-Merseyside final. But this is where the competition got really farcical. Because of the fixture congestion and the English season having to finish early due to the 1986 World Cup in Mexico, the final of the Super Cup would have to be played at the start of the following season – after Liverpool had pipped Everton to the title by two points, beaten them in the FA Cup final and shared the subsequent Charity Shield with them. And people think La Liga's a two-horse race now.

On 16 September 1986, just under a year after the first Super Cup match, Liverpool and Everton took to the Anfield pitch for the first leg of the final. Just like the FA Cup final in May, Liverpool won 3-1 and Rush scored twice. Much like the rest of the match reports on this competition in this paper, the coverage was not extensive, even though this was the final.

The game was an unnecessary burden for Everton, ravaged by injury and forced to call on their reserves. In that context their display was commendable, but Liverpool were too strong. Rush put them ahead after six minutes and although Sheedy equalised with a free-kick reminiscent of his effort later on in the season at the same end, Steve McMahon headed in from a Kenny Dalglish corner, before Rush added a third.

Two weeks later, 26,068 fans arrived at Goodison Park more in hope than expectation. Everton were still missing several key players and Liverpool ran riot, Rush scoring a hat-trick to finish top scorer of the Super Cup with seven goals. Steve Nicol got Liverpool's third and although Everton did not play badly, winning two penalties – one missed by Trevor Steven, the other scored by Graeme Sharp – the 7-2 aggregate score was emphatic.

There would be no chance of revenge for Everton either. Unloved, unwanted and unlamented, the Super Cup was cancelled after a season (and a bit), meaning Everton had to settle for beating Liverpool to the league title instead. On reflection, they probably got over it.