Sources close to Birmingham have confirmed that "serious conversations" have taken place between the two clubs regarding a possible deal for Dann and Jerome.
City know they are vulnerable to any Premier League predators following their relegation from the top flight.
But they are determined to get the best possible deal for Liverpool lad Dann, who is regarded as one of the best young defenders in the country.
A source close to Birmingham explained: "There have been serious conversations and negotiations are continuing but no fee has been agreed.
"If Dann is to leave, Birmingham are determined to obtain the price they feel is fair for one of the best young defenders in the Premier League.
"His performances over the past two years have been excellent."