Roger Federer’s loss is Gilles Simon’s gain.

Federer fell to Andy Murray 4-6, 7-6(3), 7-5 on Friday in the final stage of round-robin play at the Masters Cup in Shanghai. The setback eliminated Federer from semifinal contention and gave Simon a spot in the last four.

Heading into Friday, the semifinal scenarios for the red group were outrageously complicated. Simon stood at 1-1 in matches and 2-3 in sets (he beat Federer in three and lost to Murray in two) after two matches. Federer stood at 1-1 in matches and 3-2 in sets (he lost to Simon in three and beat Radek Stepanek in two). Stepanek stood 0-1 in matches and 0-2 in sets and had already been eliminated.

With Federer playing Murray and Simon playing Stepanek, three men (actually four since the Masters Cup standings somehow show Stepanek and Andy Roddick as essentially the same person! Stepanek subbed in when Roddick pulled out of the tournament with an ankle injury shortly before his scheduled showdown against Federer) could have finished round-robin action with a 1-2 record behind Murray’s 3-0 mark. That would have been the case if Murray defeated Federer (which he did) and Stepanek had taken out Simon (which he did not). In that scenario, it would have come down to a tiebreaker between Federer and Simon, both at 1-2, and Simon would get the semifinal nod over Federer due to his head-to-head victory over the Swiss.

There was also a chance three men could finish with a 2-1 record ahead of Stepanek’s (slash Roddick’s) 0-3 clip. That would have been the case if Federer had taken out Murray (which he did not) and Simon got past Stepanek (which he did). With a three-way tie, Simon would have been eliminated due to having the smallest percentage of sets won. So it would have been impossible for Simon to advance if three men had finished 2-1. That means Federer had to lose in order for Simon to advance, yet Simon was guaranteed to advance if Federer lost. In other words, Simon’s own match meant nothing!

Nonetheless, it all ended up a lot simpler than the scenarios described above. Simon defeated Stepanek 6-1, 6-4 and with Federer’s loss, the Frenchman finished at 2-1 and Federer at 1-2. So, obviously, Simon advanced as the No. 2 seed out of the red group behind Andy Murray (3-0).

Stepanek finished 0-2, but he deserves a break since he was on vacation in Thailand and had no ideas whatsoever of participating in the prestigious year-end tournament. Of course, that was before \Roddick pulled out of the event with an ankle injury sustained during practice in between his first and second round-robin matches. After all the possible alternates ranked ahead of the Czech declined invitations to fill in, Stepanek jumped at the opportunity and literally borrowed Murray’s shoes and Novak Djokovic’s rackets in order to play. It wasn’t enough as Stepanek went down to Simon in a routine straight sets.

That quickly set the stage for Murray and Federer, and for a while things looked good for the second-ranked Swiss. He broke Murray at 5-4 in the opener to take the first set 6-4. Federer even had a chance to finish the match off in straights as the second set featured four breaks of serve en route to a tiebreaker. Clutch play from the Scot and several scorching backhands leveled the match and forced a decisive third. Federer came out following treatment for his bad lower back and at first it did not cooperate. Murray sprinted to a 3-0 lead and a lame Federer appeared done. Yet somehow, Federer won the next four games to go up a break 4-3. In a final set that featured more twins and turns than you can possibly imagine, it was then Murray’s turn to regain momentum. The world No. 4 broke right back and held for 5-4, forcing Federer to serve to stay in the match—and the tournament. Federer did, but not before saving an incredible seven match points in dramatic fashion.

In the almost-inevitable end, however, Federer’s back ultimately failed him in the crucial moments. Murray won the final two games easily for the 7-5 win, finishing off Federer’s 2008 season and setting the stage for the semifinals. On Saturday, Murray (red group winner) will square off with Nikolay Davydenko (gold group runner-up), and Djokovic (gold group winner) will face Simon (red group runner-up).

As for Federer, the loss ends a tumultuous season that started off in stunningly bad fashion, peaked towards the latter half, and then ended off mostly neutral. The highlights, of course, were a gold medal in Olympic doubles action a fifth consecutive title at the U.S. Open.

Federer now has almost two full months off before his next significant stop: Australian Open 2009.