Birmingham are still waiting to receive an official approach from Aston Villa to speak to Alex McLeish - before the battle to thrash out a compensation package can get under way in earnest.
McLeish resigned as Blues boss on Sunday and the Scot has been the favourite with the bookmakers to replace Gerard Houllier at Villa.
Press Association Sport understands City will be seeking the full £5.4 million due in compensation for the remaining two years of McLeish's contract at the time he quit.
This figure will be reduced to £3 million on July 1 but City will demand the amount that was due on the date McLeish ended his three-and-a-half-year reign.
McLeish, who is currently on holiday, is considering a case of constructive dismissal against Blues.
His relationship with City owner Carson Yeung became increasingly strained last season.
Such action by McLeish could drag on, as was the case when Martin O'Neill left Villa last August and did not settle the matter for nine months.
But bringing such a case against Birmingham will not mean Villa can automatically escape paying compensation to their midlands rivals for the remainder of McLeish's contract.
Any such action taken by McLeish against Birmingham would run alongside any battle between the two clubs over the former Rangers manager.
Certain sections of Villa fans continue to make it clear they do not want McLeish as manager.
Jonathan Fear, editor of the Vital Villa fans' website, said: "I would fear for the atmosphere and attendances at Villa Park if Alex McLeish is appointed manager.
"I've got friends who are adamant they will return their season tickets if McLeish is appointed.
"McLeish is a tough bloke but no matter how thick skinned you are, it will be a tough sell for him to win over the Villa fans."
Villa are keen to make an appointment as soon as possible so McLeish - or any new manager - can be in place before the players report back for pre-season training on July 7.
But Birmingham are also stepping up their attempts to find a replacement for McLeish.
Birmingham chairman Peter Pannu said: "I am discussing the situation with Carson and we hope to install the new man as soon as possible.
"There are at least six (candidates) on the radar."
Former Newcastle boss Hughton is the number one choice of Birmingham fans in a poll conducted by the Birmingham Mail newspaper.
But Roberto Di Matteo and Gianfranco Zola are also free agents after their previous spells at West Brom and West Ham respectively.
Blues are set to complete the signing of Morgaro Gomis from Dundee United on a free transfer despite McLeish's departure.
Pannu said: "Gomis is still coming in to Birmingham."
City have also received an inquiry from Sunderland over midfielder Craig Gardner but the club insist no bid has been made so far.