The flight instructor reported that during the training flight, he retarded engine power during the downwind leg of the traffic pattern in order to simulate an engine failure. During the flare for the simulated forced landing the main rotor blade of the gyroplane struck the ground directly behind the aircraft which resulted in the gyroplane rolling over on its left side. The pilot reported no mechanical failures or malfunctions of the gyroplane prior to the accident. The aircraft received substantial damage which included a bent keel, a bent/broken rotor mast, a damaged main rotor blade, empennage damage, a cracked cabin, and a broken propeller.