• 1966 Bundesliga champions were relegated to third flight on Thursday • Owner not prepared to pay for licence, meaning threat of demotion

The former Bundesliga team 1860 Munich face demotion to Germany’s fourth or fifth tier after failing to meet a deadline for a third-division licence.

1860 were due to make a payment of reportedly €5m to €10m to the German football federation for the licence by Friday afternoon, but their financial backer Hasan Ismaik said through his company HAM that he was not prepared to pay it because 1860 “refuses to make necessary changes to solve the many issues facing the club”. Ismaik, a Jordanian billionaire who owns 60% of 1860, was the club’s only hope of meeting the payment deadline.

1860 were relegated from Germany’s second division on Tuesday after a play-off defeat to Jahn Regensburg, a team who were playing fourth-tier football the season before.

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Despite missing the payment, Ismaik said he will continue to support the club at the fourth or fifth level “and push forward necessary changes”. The statement added: “His emotional ties to 1860 and his loyalty to the fans remains strong. The financial commitment to the beneficial work of TSV 1860 is also not affected by the aforementioned business decision.”

Ismaik is at loggerheads with those remaining at the club over changes he wants pushed through that 1860 said on Thursday “the club cannot fulfill for legal and organisational reasons”. The Süddeutsche Zeitung newspaper reported that Ismaik, who only has 49% voting rights at 1860 in line with the Bundesliga’s 50-plus-1 regulation, has made his financial support dependent on conditions that would have given him more power. The 50-plus-1 rule seeks to limit the influence of external backers.

Ismaik, who did not attend Tuesday’s play-off defeat, has denied any responsibility for the club’s plight and accused management of “unscrupulous power struggles”. President Peter Cassalette and chief executive Ian Ayre resigned on Tuesday, leaving vice-presidents Heinz Schmidt and Hans Sitzberger in charge.

The play-off loss at home was marred by violence from angry fans. Around 1,000 riot police lined up to prevent the situation escalating as the game was held up for 15 minutes.

Facebook Twitter Pinterest Police secure the pitch after trouble broke out during the game. Photograph: Peter Kneffel/AP

1860 had the third most expensive squad in the second division after Stuttgart and Hannover, who both secured their return to the Bundesliga. 1860 finished third from bottom, leading to the play-off against the third division’s third-place finisher.

1860, who won the Bundesliga in 1966 and played in the top flight as recently as 2004, returned to the third level for the first time in 24 years, but Friday’s missed deadline means they will drop even further. 1860’s under-21, under-19, under-17 and under-16 teams were also relegated this season.