In the five years since The Damned Utd was published, it has been the subject of a lawsuit from John Giles, incurred the wrath of the Clough and Revie families and been condemned by several of the journalists who were friendly with both managers. Even the makers of the hugely successful film adaptation felt duty-bound to distance themselves from it. The purpose of this piece is not to enter the debate about David Peace's supposed infringement of the rights of Giles, Brian Clough and Don Revie – amongst others – by naming them as characters in his fictional account of Clough's 44 days at Leeds. It is, rather, to acknowledge Peace's astonishing achievement in producing one of the best novels ever written about sport.

The paucity of such novels, in this country at least, is mystifying. The genre is well established in the USA. Philip Roth's The Great American Novel links baseball with communism; Don DeLillo's Underworld opens with the New York Giants winning the National League pennant in 1951; and Norman Mailer, John Irving and Tom Wolfe have all used 'sports'. In the US, there is no dichotomy between the two great traditions of sports writing and novel writing. With odd exceptions – Brian Glanville and BS Johnson, for instance – such multitasking tends to be frowned upon in Britain. Even Nick Hornby, whose Fever Pitch was part of that early-1990s shift that led to football finally being deemed worthy of cultural comment, restricted his musings on obsessive male behaviour, modern romance and Liam Brady to the uncontroversial confines of non-fiction.

Like Fever Pitch, The Damned Utd has spawned several imitations. Colin Shindler has written a fictionalised account of the Mercer-Allison era at Manchester City. Robert Endeacott's novel, Dirty Leeds, is at times an homage to Peace. And there have been several books on Revie and Clough that have 'tried to put the record straight'. Some of these are unashamedly nostalgic, pining for the good old-bad old days when clubs spotted footballers in local schools rather than importing them from Estonia, Serbia and Mexico. When British, not foreign, talent dominated the top flight. And when teams outside the Big Four (Big Six?) had a chance of glory.

Peace, to his credit, deconstructs what the Marxist historian Raphael Samuel memorably called the "theatre of the memory". Nostalgia is airbrushing of the mind. It sucks away at the deep and jagged lines of an era's divided and fraught history. The Clough-Revie rivalry came during a time of transition, an age of both anxiety and affluence. The post-war settlement had collapsed and the Thatcherite service economy had yet to take shape. "The old is dying and the new cannot be born," as the Italian theorist Antonio Gramsci remarked of an earlier period of turmoil. "In this interregnum a great variety of morbid symptoms appears." This is the socio-economic context to the novel. Fear and insecurity drove these two great managers to amazing success but also, ultimately, to tragic downfalls worthy of a Shakespearean drama. Football, like film and popular music, is part of the collective fantasy. And football managers, as the novelist and art critic Gordon Burn wrote, are "puppet-masters condemned to the sidelines… caught up in a play of control, destiny and impotence".

Peace acknowledges in this interview that the writer occupies a similarly peripheral role. "You cannot compete against the actual narrative of football," he said. "It's just too powerful." And yet, given the amount of passion, hubris and tragicomedy involved in the game, there have only been a handful of great football novels.

This, in my view, is down to class snobbery. Even if they deigned to recognised such a term, which is doubtful, the literary classes would dismiss 'football literature' as an oxymoron. Those amusing Oxbridge Pythonites once satirised the breaching of the boundaries in a (admittedly very funny) sketch featuring goalkeepers reciting poems about the river Yangtze. (Peter Shilton, Leicester: "O Yangtze. O Yangtze. Beautiful river. River, full of fish.") On the other side of the Atlantic, however, the national game is taken very seriously as a literary subject; both Roth and DeLillo, for example, chose baseball as a metaphor for the American Century.

I suppose I feel strongly about this because, as a young boy obsessed with football, my life changed after reading Glanville's Goalkeepers Are Different. It was a gritty, beautifully-paced account of the bitterness, frustrations and unglamorous lifestyle of an ordinary footballer. After that I gobbled up the great kitchen-sink classics – David Storey and Alan Sillitoe's best novels were about sport – before being advised at university that literature and sport were mutually exclusive. This is why The Damned Utd blew me away. As a Leeds United fan, I am not offended by its reinforcement of the Dirty Leeds myth. And, as an admirer of Clough – I am one of a small number of Leeds fans who thought/still thinks he should have been retained – I have no problem extricating the real Clough from the fictional one. What excites me most about the novel – apart from the two time-frames running in parallel and the repetitive, Beckett-esque rhythms – is Peace's imaginative use of the troubled inner voice. As a device, it is viscerally exhilarating. I can remember watching the live Yorkshire TV debate between Clough and Revie. Clough had just been sacked by Leeds and yet he appeared to be cheerfully mocking his bête noire. I really wanted to know what was going on inside his head. Revie was the incarnation of all he had chosen to hate. "In place of a life," writes Peace, "revenge".

The Damned Utd is the ultimate revenge drama; a great novelist's fictionalisation of a defining moment in English football. When Shakespeare dramatises the lives of English kings, or Norman Mailer speculates about the inner lives of American idols, no-one takes them to task for distorting, or even reinventing, history. A genre besieged by platitudinous autobiographies surely has space for the occasional, stylishly-inventive reimagining of one puppet-master's self-destructive megalomania.

Why did you write The Damned Utd ?

Leeds United were always there in the background of the Red Riding books and so for a while I'd had half an idea to write a novel that told the occult history of Leeds United. My original idea, bizarre as it now sounds, was to have David Harvey, the former Leeds goalkeeper, in his caravan on the Orkneys in Scotland, talking into a tape recorder – whilst drinking malt whiskeys, which apparently he is fond of – trying to understand the history of Leeds United. It was going to be a séance of Leeds ghosts coming back to haunt Harvey. So I spent the first six months researching the entire history of Leeds United. But, while I was doing the research, two things happened: the Bowyer-Woodgate incident and the financial unravelling. And so the story seemed unending and it was difficult to know the point to stop at. And also I didn't know how far they were going to fall.

So The Damned Utd was, originally, going to be Harvey, or 'The Goalkeeper', telling the occult history of Leeds United, and Brian Clough telling the story of the 44 days. I think the 44 days was always part of it simply because the first ever football game I saw was Clough's first game as Leeds manager, in July 1974, when he brought Leeds to play a testimonial at Huddersfield. I was seven and I was trying to get Trevor Cherry's autograph and I remember Clough getting off the bus and my dad saying, "That's Brian Clough." And then Clough's last game for Leeds was when he took them back to Leeds Road for an evening League Cup game against Huddersfield. So Town book-ended the 44 days.

My dad always liked to talk about the same three things in football. He'd seen the Busby Babes. So he talked about them. He was at teacher-training college in London when Tottenham won the Double. So he talked about that. And then Clough's 44 days. Why did they offer Clough the job? Why did he take it? What happened in those 44 days? Before the research, my impressions of Clough were based on the two European Cup wins with Forest, hitting fans on the pitch and then becoming, sadly, a caricature of himself. And there were rumours of drinking and bungs. So his reputation was not that great. And in retirement he was a rent-a-quote; often drunk, it's all there on YouTube now. This was my impression of him before the book. But when I researched his life, which meant tracking down every single book that had ever been written about him – and also going through all the local newspapers at Derby – I became aware of what a great player he had been, how his career had been cut short and how he hadn't fulfilled his potential. And about his time at Hartlepools and Derby. And the strike. And so Clough overtook the book, and the 'you' voice became Clough talking to himself, in the present tense, about his memories.

One of those memories, about running up and down the steps of a stadium as a player, trying to get back to fitness after the horrific injury, could have been a scene from The Loneliness of the Long Distance Runner or This Sporting Life. How much were you influenced by the great northern realist novels of the fifties and sixties?

The thing that sealed it for me – deciding the book would be about Clough and not the history of Leeds United – was that in the research I found out that Clough really revered Alan Sillitoe and David Storey. And these were the writers I'd been wanting to pay tribute to. My dad, who came from a very working-class background, was inspired by writers like Sillitoe, Storey, John Braine and Stan Barstow. They captured a moment when a working-class person could better themselves. I was initially drawn to things like the Sherlock Holmes novels, Ernest Hemingway and Raymond Chandler, Dashiell Hammett and Georges Simenon – which is where my crime interest came from. But my dad also had these other northern realist novels in the house. Sillitoe, Storey and Braine also read Hemingway and those crime writers and then they used that unadorned, clipped, American style. And so it all came together.

Clough narrates his short time at Leeds in the first person, but, as you say, there is a second narration – in italics – which deals with his playing career and his time at Derby. For this, you use the second person, the unconventional pronoun, which is very unusual.

It all comes full circle. It ends on the 44th day but the memories take you back to the first day. So the last 'you' thing is him taking the Leeds job. I had to think of a way to differentiate between the present tense and the past. One way to do it would have been to write in the past tense, but I wanted the 'you' in the italics, in the second person, to be Brian Clough in 1974 remembering, not Brian Clough in 1990. How do we remember ourselves? When you were telling me what you've done since we last met, it was not Anthony now, it was Anthony in the past. It's not a different person, but it's also not the same person, it's 'a second person'.

I'll tell you where it comes from, the 'you' voice. When I was growing up, we would come into Leeds every two weeks or so with my mum and dad and they would go shopping and then to the Queen's Hotel for a cup of tea, pretending to be posh, and I would go to Austicks bookshop. The NME in those days used to talk about Dostoyevsky and Beckett and I didn't know who these people were. I couldn't check them up on the internet, obviously, so one day I bought Company, by Samuel Beckett, which is written in the second person, because it's dealing with memory. And then later, in the late 1980s, I was struck by Jay McInerney's Bright Lights, Big City, which again is written in the second person. And when I was at Manchester Poly and I wrote a novel which was rejected by everybody, I wrote one narrative in the first person, one in the second and one in the third. I didn't get it right. But in 1983 there is a second person narrative. And again in Occupied City. So I've always liked it, it's an underused voice…

The Beckett influence is very strong, especially your use of repetition to illustrate both Clough's obsessive nature and the routine aspects of football. You've got Clough's inner voice saying: 'You believe in football; in the repetition of football.' The Damned Utd, and your style in general, is famous for its use of repetition. It's become one of your trademarks. To the point where – and this is the ultimate accolade I suppose – it has been widely parodied.

You always remember the uncharitable reviews. I remember somebody once describing The Damned Utd as 'Samuel Beckett-lite'. But I took it as a compliment. There's one particularly brilliant parody in James Brown's — featuring a fictional Phil Brown — which I thought was just fantastic. In all my books, I use repetition a lot. Our day-to-day lives are incredibly repetitious. It can be bad in that it grinds you down, but it can also be, in times of tragedy, sustaining. On a personal level, I really feel sustained, for example, by the repetition of the football league fixtures.

Yes, just before we started the interview you were poring over today's football results. You seem immersed in that world. 

It gives a structure to my existence. The way the season is constructed. The repetition of the seasons. But if you win the Cup, or you get promoted, you've triumphed over the repetition. In the end, it's a metaphor for the way we live our lives.

Why didn't you just fictionalise Brian Clough — give him a different name?

It just doesn't work. You cannot compete against the actual narrative of football. It's just too powerful. People condescendingly call it a soap opera. But it's not — it's drama.

You returned to Yorkshire two years ago, after 17 years in Japan. You wrote The Damned Utd in Tokyo. You must have been a bit cut off from the game's incredible transformation.

I wasn't that cut off. In Japan, I subscribed to Sky TV. Before the internet, my dad would send me the weekend sports sections. And with the arrival of the internet I was able to follow all Huddersfield Town games. So I was quite aware of everything that was going on.

What do you think of today's game, given that some people have praised The Damned Utd for evoking the 'golden age of football', in the mid-seventies, when it seemed more authentic, more real, grittier, more working-class, more in touch with ordinary people – especially the fans?

Throughout the 20th century, and into the 21st century, football has acted as a metaphor for what has happened in society. I watched football with my dad in the seventies. We'd go to Huddersfield when we were at home and Leeds when they were at home. So we were going to a game a week. He'd rail against the modern game as it was in the seventies, saying it had all gone to the dogs. My grandfather, who'd seen the Huddersfield title-winning side of the twenties, had said the same thing to my dad when my dad was a boy. Bill Shankly, in about 1973, said, "There are players now who have swimming pools, tennis courts and sports cars and they've never won a medal." Today, there are players earning in a week what others don't even earn in a lifetime. And they've never won anything. The game's excesses and its remoteness reflect the excesses and remoteness prevalent in today's society.

The Damned Utd has been criticised for using real characters in fiction. Why do you think that kind of writing is more acceptable in continental Europe and in the USA?

Storytelling began in the recounting of events of actual people. We believe that Beowulf actually existed. Greek drama and Shakespeare used real people, real events. We spend a lot of our waking life thinking about football. Speculating, imagining, fantasising about it. Football wouldn't exist without the imagination. [The Spanish filmmaker Luis] Buñuel said, "There is no reality without imagination, there is no imagination without reality." The two go hand in hand. And to me, when I was growing up, Brian Clough was a very public figure. Not only was he a football manager, he was always in the media; not a private man like, say, David Moyes. He was on TV, writing newspaper columns, being impersonated by Mike Yarwood and interviewed by Michael Parkinson, really provoking people. People talked about him and tried to understand the way his mind worked. He created a persona. In the age I grew up in the football manager also became a pundit. Clough, Malcolm Allison, Jack Charlton – they were all creating these larger-than-life fictional personas.

The middle classes have come into football in a big way, and The Damned Utd has benefited from that. Nick Hornby was the groundbreaker there. Even then, there is this attitude from the 'intelligentsia' that The Damned Utd is only a novel about a football manager. And then some folk are suspicious because it is a novel. I think it's a very British thing. It doesn't happen on the Continent or in America. We're very wary of pretension and affectation in this country. We prefer the voice of the person who's 'done it'.

I've done book tours in Europe and, when you talk to journalists in France and Italy, they expect you to be knowledgeable about books and music and politics as well as sport. Football is part and parcel of a wider culture. They don't pigeonhole you.

Were you rattled by John Giles's expensive lawsuit, which claimed you wrongly portrayed him as a key figure in Clough's sacking?

It never went to court. It was settled out of court by the publisher. I never apologised to John Giles and I would never apologise to John Giles. Because I never thought I'd done anything wrong. But the threat of being personally libelled for tens of thousands of pounds for the 'psychological damages' I'd inflicted on him did rather taint the book, yes.

Did you like the film?

The minute the book came out, a number of very good directors were interested in filming it. One of them was Stephen Frears, who wanted to make it as an homage to This Sporting Life. He wanted to make it gritty and black and white. I thought this was fantastic. But, for whatever reason, he pulled out. And I was not involved in the making of the film. There was an attempt to distance it from the book because the book was getting such a negative press from the Clough family and former players.

The first time I saw the film, I thought there were some tremendous performances and scenes — but I also felt that it was almost a misreading of the book. It bore very little relation to the book. Having said all that, I've since seen the film twice – once with my son, who hasn't read the book but is a very big fan of the film – and I know a lot of people came to the book because of the film. So I don't want to appear churlish. It helped the book reach a whole new audience. But I still think you could remake it. In black and white.

Does George, your 14-year-old son, intend to read The Damned Utd?

He started to read the first page but he closed the book and said, 'I don't like the style.' He admits that his favourite book is the Argos Catalogue.

Some readers from a non-literary background find the style a bit disorientating.

No-one has ever said to me they've found that second-person narration difficult – apart from my son.

Brian Clough's widow, Barbara, said, "Whoever heard of a novel about real people?" But you wrote, "This novel is another fiction based on another fact."

There is a lazy post-modernism that says everything is a fiction. In life, though, we know there are truths. But an individual's relationship with football is very subjective and very personal. In that way it is like a religion. So how then are you going to write an absolutely objective factual book about Clough's 44 days at Elland Road? You're simply not going to be able to do it. The ghost-written autobiographies of modern-day footballers, and the way we report football matches, leaves this whole space for the imagination. You watch, say, Ally McCoist and Neil Lennon on the touchline and you want to know what they said and you start to imagine... football would be nothing without imagination.

Do you think equally great novels could be written about Harry Redknapp, Alex Ferguson, José Mourinho – who, like Clough, are all larger-than-life?

It's not just that they are larger than life. It's the narrative and drama of football. For managers to survive in that drama they have to be a character – or they will be destroyed.