Madrid: Atletico Madrid were dumped out of the King's Cup 3-1 on aggregate by third-tier Albacete on Wednesday in what may prove to be a humiliating swansong for embattled coach Gregorio Manzano.

On a night of last-32, second leg upsets, Atletico's struggling La Liga rivals Villarreal also suffered the ignominy of being eliminated by third-tier opposition when they fell 2-0 at home to Mirandes to exit 3-1 on aggregate.

After losing last week's first leg 2-1 at Albacete, who have local hero Andres Iniesta as a major shareholder, Atletico conceded after just under 20 seconds.

Atletico had plenty of possession, but hardly threatened the visitors' goal and exit the competition amid reports that an agreement with former Argentina captain Diego Simeone to replace Manzano has been sealed.

Simeone, a fan favourite when he played for Madrid's second club, quit as coach of Argentine side Racing Club on Tuesday.

The 42-year-old was quoted as saying in Spanish media on Wednesday that he had not signed any preliminary accord with Atletico, but he had spoken with the club.

"There is a chance," he said. "Right now, I don't have a team and they [Atletico] have called me."

At his post-match news conference, Manzano apologised to the fans, the players and the club's board.