Rafael Nadal lost to Spanish countryman Fernando Verdasco for the first time in the Madrid Open Thursday, then threatened not to return if the new blue clay-court wasn't discarded. Nadal blew a 4-1 lead in the third set in losing 6-3, 3-6, 7-5, his first defeat to Verdasco in 14 matches. The third-round loss was Nadal's earliest exit in a clay-court tournament since he fell to Olivier Mutis in the second round in Palermo, Italy, in 2004. Roger Federer, meanwhile, dispensed with Richard Gasquet 6-3, 6-2 to advance to the quarterfinals. Nadal blamed his first loss on clay in almost a year on the blue clay, which players have said was slippery, and sent an ultimatum to organizers, threatening to strike the tournament from his calendar if the traditional red surface was not restored. “Being able to move is very important for me and if I can't move well, I can't hit the ball well either,” said Nadal, a two-time Madrid champion. “If things don't change, this will be one less tournament on the calendar for me. “This surface destabilizes the game. It is a completely different game and I don't want to take risks.” Verdasco, who became only the seventh player to beat Nadal on clay in eight years, burst into tears on the court in front of his hometown fans. “After losing so many times against honestly the best player on clay ever, to beat him on clay is the maximum,” said an emotional Verdasco. “I don't have words. I am happy for the win, although it is difficult to hold myself together now. I need to calm down, rest and get ready for the next match.” Verdasco will play Tomas Berdych next after the Czech beat Gael Monfils 6-1, 6-1. The third-seeded Federer hit 10 aces and didn't concede a break against the Frenchman en route to improving his record this season to 24 wins and three loses. The 16-time Grand Slam champion will face David Ferrer in the quarterfinals. The fifth-seeded Ferrer saved three match points before smacking an unreachable forehand winner into the corner to seal his hard-fought 7-6 (5), 3-6, 7-6 (8) victory over fellow Spaniard Nicolas Almagro. Also, Alexandr Dolgopolov of the Ukraine ousted fourth-seeded Jo-Wilfried Tsonga 7-5, 3-6, 7-6 (2), and will meet Juan Martin del Potro after the Argentine beat Marin Cilic of Croatia, 6-2, 6-4. On the women's side, Serena Williams overcame a sluggish start to beat Caroline Wozniacki 1-6, 6-3, 6-2 and reach the quarterfinals. Williams hit the net on three straight points in her opening service game to be broken and then didn't put up much resistance in the rest of the first set. But she broke Wozniacki to love in the fifth game of the second and then ripped a forehand return winner for another break that put her ahead 4-3. Wozniacki had no reply as the Dane hit a shot long to go down 2-0 in the decider, and Williams cruised to victory in a matchup of former top-ranked players. “I had a really slow start today. I don't know why, I was just a little sluggish and mentally I was fighting some demons maybe,” said Williams, who extended her record to 10-0 on clay this season. “I was just like, ‘I gotta do better than this.'” Williams will play second-seeded Maria Sharapova after her Czech opponent Lucie Safarova withdrew before their match due to illness. Fourth-seeded Agnieszka Radwanska of Poland knocked off Roberta Vinci 7-6 (1), 6-4 and will play Varvara Lepchenko of the United States after she beat Anabel Medina Garrigues 6-1, 6-7 (3), 6-3. Czech player Lucie Hradecka defeated Russia's Ekaterina Makarova 6-2, 7-6 (5) to advance to a meeting with fifth-seeded Sam Stosur. On Wednesday, Federer rallied to beat Milos Raonic 4-6, 7-5, 7-6 (4) to narrowly avoid his earliest tournament exit in two years. Federer hasn't been eliminated from a tournament in the second round since the 2010 Rome Masters, and the 16-time Grand Slam champion had to call on his wealth of experience and shotmaking abilities to survive an early scare against the 23rd-ranked Canadian player.