Roger Federer faces an uphill task to qualify for the last four of the ATP Finals after a 7-5, 7-5 defeat to Dominic Thiem in his tournament opener on Sunday.
The six-time champion was in action in the evening match after Novak Djokovic had swatted aside debutant Matteo Berrettini in the earlier Group Bjorn Borg contest in London.
Federer and Djokovic, who has won the end-of-season event five times, will meet later in the week in a repeat of this year’s Wimbledon final, with two players advancing from the four-man group.
The Swiss 20-time Grand Slam winner recovered quickly from being broken in the first game of the match but the Austrian fifth seed repeated the dose in the 11th game and took the opening set 7-5.
Federer squandered an early chance to break in the second set and the games went with serve until the 11th game again, when Thiem broke to love after the third seed dumped a forehand into the net.
The Austrian stuttered while serving for the match, forced to save two break points, but he held his nerve to take the set 7-5 and seal victory on his second match point.
Thiem came into the match with a 4-2 winning record against his illustrious opponent but the result is still a surprise. The only time Federer has failed to progress to the knockout stages was in 2008.
Earlier, Djokovic began his quest for a record-equalling sixth ATP Finals title and sixth year-end number one spot a 6-2, 6-1 romp against Berrettini.
The Serbian was last week nudged off the top position in the rankings by Rafael Nadal, who is also in the eight-man field in London.
Djokovic eyes No 1
Djokovic must reach the final at the O2 Arena to stand any chance of dislodging Nadal but there are major questions over the Spaniard’s fitness.
If the Serbian does claim the year-end number one spot, he would match the record of Pete Sampras and victory at the end-of-season event would equal Federer’s mark.
The second seed saw off the challenge of Berrettini in just 64 minutes, converting five of seven break points and out-serving his 23-year-old opponent.
The eighth seed went toe to toe with Djokovic at the start of the match but the Serbian set off on a run of eight straight games to lead 4-0 in the second set.
“It feels great to be back,” said the Wimbledon champion. “Earlier this year I had a great stay in London, and over the years I’ve played well in this arena.
“It was not easy for him at his first Finals match, I knew he would be nervous at the beginning and I used my experience to perform well.”
Germany’s Alexander Zverev shocked Djokovic in last year’s final but the Serbian is the firm favourite in London after cantering to victory at last week’s Paris Masters.
Nadal, who has never won the event, is bidding to clinch the year-end number one spot in the ATP rankings for a fifth time.
The tournament, featuring the year’s best eight players, is contested in a round-robin format with the best four players and doubles teams reaching the knockout semi-finals stage.
Nadal, in Group Andre Agassi, begins his campaign on Monday against defending champion Zverev.