Florentino Perez has resigned as president of Real Madrid.
Florentino Perez has seen Real struggle for form this season
The 58-year-old will be replaced with immediate effect by former club vice-president Fernando Martin.
"We have a squad of great players," said Perez. "But some of them think they have a guaranteed place and that they are the best. They are confused."
Real have won the Primera Liga title twice and the Champions League once during Perez's reign - but have not secured any silverware since 2003.
Perez replaced Lorenzo Sanz in 2000 and heralded the "galactico" era at the Bernabeu by buying stars such as Portugal's Luis Figo, Frenchman Zinedine Zidane, Brazilian Ronaldo and England captain David Beckham.
But he now believes flaws in the policy of buying such high-profile players have cost the club on the pitch.
PEREZ'S MADRID REIGN
2000: Wins election and buys Luis Figo for world record £37m
2001: Sells training ground for £326m, buys Zinedine Zidane for £45.8m, Real win title
2002: Wins Champions League, buys Ronaldo for £25m
2003: Wins Spanish title, buys David Beckham for £24.5m
2004: Buys Walter Samuel for £15m, Jonathan Woodgate for £13.4m and Michael Owen for £8m
2005: Trophyless for second successive season
2006: Resigns as president
"We have constructed a great squad but some of the players have got mixed up," added Perez.
"I want to capture their attention through my resignation so that they understand that all that matters is Real Madrid.
"I don't regret bringing the best players in the world to this club, but perhaps I wasn't able to make them understand the importance of their responsibilities, maybe I have educated them badly.
"Perhaps my departure is necessary to unblock the situation.
"My decision has been made in order to help Real Madrid. It was carefully considered and I believe that it is an act of responsibility."
During Perez's reign, Madrid won the Spanish league and Spanish Super Cup double in both 2001 and 2003.
In between, they had a superb 2002 winning the Champions League, the European Super Cup and the Intercontinental Cup.
Earlier in February the Deloitte Football Money League was published, confirming that Madrid had leapfrogged Manchester United to become the world's richest club.
But they are facing another trophyless season following a disappointing series of results.
Perez's resignation comes after a bad week in which the team lost 1-0 at home to Arsenal in the first leg of their Champions League knock-out tie, then were sunk 2-1 by Real Mallorca on Sunday.
Perez was less than two years into his second term as Real president having been re-elected in July 2004.