Magdeburg miss out in yet another qualification, finishing seventh because they had scored less goals than Hertha Zehlendorf. Magdeburg competed in tier IV now, finishing twelfth in Oberliga Nordost/Staffel Nord. This was the worst position the club ever finished in – and a mere 444 spectators came to see the matches on average. In 1996–97 Magdeburg moved to Oberliga Nordost/Staffel Süd again. In this season, another Magdeburg team, Fortuna Magdeburg had been promoted to this league, leading to better attendance levels: Both derbies and the key match against FSV Hoyerswerda were watched by more than 10,000 people. FCM averaged 3,000 spectators in that season. Eventually, 1. FC Magdeburg could reaffirm their position as the number one club in the city, finishing first in the league and winning promotion to the Regionalliga Nordost. In 1997–98 Magdeburg managed to stay in the third-tier Regionalliga and win the Saxony-Anhalt Cup for the second time and in the following year, the team competed for promotion to 2nd Bundesliga for a long time, but eventually finished third, raising hopes that the team would be able to qualify for the reduced Regionalligas in the following season. However, a tenth place meant relegation to tier IV once more. Consolation could only be found in the club's reserves winning the Saxony-Anhalt Cup for a third time. Since 2000 Magdeburg had a very successful season in 2000–01. Not only did the club win their league in superior style, scoring more than 120 goals, but they also reached the quarter final of the DFB-Pokal. 1. FC Magdeburg beat Bundesliga side 1. FC Köln, holders FC Bayern Munich and Karlsruher SC, ultimately going out against eventual winners Schalke 04. Additionally the club won their fourth Saxony-Anhalt-Cup. In the promotion play-offs, Magdeburg beat their old rivals BFC Dynamo 5–2 on aggregate, but financially the club was in deep trouble. In order to be allowed to play, they had to raise 5 million DM in a matter of days. A two-day donation drive initiated by the fans brought 1 million Marks, the remaining sum was loaned to the club by two banks. Magdeburg managed to remain in the league, finishing twelfth, and averaging 4,500 spectators, but in June 2002 the club had to go into receivership. This led to the club's relegation to tier IV, and almost all players left the club and 1. FC Magdeburg had to manage the next season with