Lee was inundated with calls when a statement by the Birmingham board indicated that their chairman, Sullivan, had withdrawn his support following the First Division club's committal for Crown Court trial on charges of advertising misleading ticket prices.
Lee, whose position at managerless City, has been undermined by talk of various takeover bids, described claims that Sullivan - owner of the Sport and Sunday Sport, and with a personal fortune of pounds 300m -had moved to Maine Road as "a load of tripe".
He said: "All three major shareholders of Manchester City will tell you this report is utterly absurd."
Birmingham City's managing director, Karren Brady, was charged with five counts under the Consumer Protection Act. She will appear before Birmingham Crown Court on 15 November.
Following the hearing at Birmingham Magistrates' Court, Sullivan and the club's board of directors appeared to be on the verge of selling up, describing events as "a very sad day in the history of Birmingham City."
The board, which is to hold an emergency meeting, blamed Birmingham City Council and some fans for the charges against Brady and the club.
In a statement, the club said: "The Board of Directors feel that during the past three and a half years they have taken the club into a new dimension. They have personally invested some pounds 7,000,000 rebuilding the stand, improving the team and putting the club firmly on the footballing map.
"While the club acknowledges the tremendous support that it receives from the vast majority of supporters, the owners feel that they must now take the decision of stepping aside.
"The owners fully accept their responsibilities and legal obligations as directors but are outraged that, on the basis of complaints from a minority of their own season ticket holders, the managing director is on bail pending trial and the club and she stands, if convicted, to be liable for unlimited fines.
"The current costs are running into tens of thousands of pounds. Today marks a very sad day in the history of Birmingham City Football Club."
Sullivan bought Birmingham City from the receivers in 1993 when they were languishing in the Third Division. He then appointed Brady as managing director - the first woman to control a major club.
Peter Reid has become the fifth Premiership manager this season to be charged with misconduct by the Football Association after the confrontation with the referee, Paul Danson, who sent off two Sunderland players at Arsenal last weekend.
The Sunderland manager follows Coventry City's Ron Atkinson (twice), Southampton's Graeme Souness, Middlesbrough's Bryan Robson and Everton's Joe Royle into the dock at Lancaster Gate as the rift between officials and the professionals grows .
The deteriorating relationship will be discussed today when the League Managers' Association meets the referees at a seminar in the Midlands.
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