After the 2006–07 season, in which the team dropped for the second time to the 3rd league, and after years of searching for someone to buy Hapoel Jerusalem, disenchanted fans, extremely dissatisfied with the management, resolved to create a company with the aim of purchasing the club. When it became evident that reaching such a deal was impossible, they decided to start an alternative team. The group, led by journalist Uri Sheradski and supported by then future mayor Nir Barkat, bought Hapoel Mevasseret Zion/Abu Ghosh (which was founded in 2004 by a merger of two clubs from Abu Ghosh and Mevasseret Zion), and renamed it "Hapoel Katamon/Mevasseret Zion". The new name was taken from Katamon, a neighborhood of Jerusalem where Hapoel Jerusalem played from 1954 until moving to the YMCA Stadium and later on to the Teddy Stadium in the early 1990s. The first game was played October 19, 2007, to a crowd of 3,000; Hapoel Katamon won Hapoel Nahalat Yehuda 2–1.