Blackburn Rovers confirmed yesterday that Sutton, a pounds 5m capture from Norwich by Kenny Dalglish four years ago, was "not for sale at any price". Villa, who had been prepared to lavish almost half their transfer kitty on a player whose tally of 18 League goals last season was equalled only by Michael Owen, must now decide whether to test the Lancashire club's resolve with a higher offer.
Ewood Park appears to have more than its share of unsettled individuals. Tim Sherwood, their championship-winning captain, is anxious to follow Colin Hendry out, while it is said within the game that Blackburn's unglamorous image and location make it difficult to attract players of the requisite quality, even with Jack Walker's wallet to woo them.
Birmingham, despite being forever stigmatised by Crossroads and Spaghetti Junction, is altogether better placed. Indeed, Gregory's bold attempts to recruit Alan Shearer, Andy Cole and now Sutton have foundered solely on their respective clubs' reluctance to sell.
The pounds 6.75m purchase of a current England player, Paul Merson, from Middlesbrough and Alan Thompson's preference for Villa over Leeds when the pounds 4.5m midfielder was leaving Bolton, demonstrated Villa's pulling power.
Shearer has reputedly been impressed both by Gregory and what he has heard about Villa from Gareth Southgate and Merson at international get- togethers. However, if he does leave Newcastle, as seems increasingly likely, the attractions of the West Midlands might rate rather lower than the financial clout of Italy, Spain or even Manchester United.
Talking of whom, Gregory was keen to make Cole part of the deal which deprived him of Dwight Yorke in August and created the current vacancy. Alex Ferguson, aware that United's commitments at home and in Europe meant they would need back-up to the Tobagan, was equally determined that Cole should stay. Circumstances have already vindicated his decision.
By turning to the 25-year-old Sutton, who famously antagonised Glenn Hoddle by refusing to play for England's B team last season, Gregory underlined his intention to buck the current trend by buying British.
He also underlined Villa's title ambitions and said yesterday: "The chairman [Doug Ellis] and I agree that the time to strengthen is from a position of strength and we shall certainly be trying to do that."
Villa stand six points clear in the Premiership, but their exalted status has been achieved largely on the back of defensive solidity and goalkeeping excellence. They have scored only 10 times in eight matches.
Gregory's attacking options are limited to Merson, who is best as a link man rather than an out-and-out striker; Julian Joachim, who has threatened to fulfil the potential he showed at Leicester without scoring regularly; and Stan Collymore.
Collymore's hat-trick against weak Norwegian opposition in the Uefa Cup last week persuaded the watching Alan McInally - who scored 18 goals before Christmas for Villa a decade ago - to suggest that the manager could "put his money away".
But the pounds 7m man was ineffectual again at Coventry on Saturday, prompting Gregory to move for the more consistent Sutton. Should the player press for permission to speak to Villa, Blackburn's initial rebuff may not be the end of the matter.