The Scottish Football Association have not ruled out legal action in their bid to be compensated for the loss of Alex McLeish to Birmingham.

McLeish quit as Scotland boss last month before being unveiled by Blues the following day - after the Premier League club had been denied permission to open talks.

The SFA are reported to be demanding £1million for losing McLeish, whose contract was due to expire after the 2010 World Cup campaign.

But City - who received £3million from Wigan after Steve Bruce rejoined the Latics - are said to be stalling at around £600,000.

And SFA chief executive Gordon Smith admits the governing body may turn to legal action if they do not receive a suitable offer.

"We are in negotiations with Birmingham City," Smith said. "We do not want it to get messy but the fact is we would rather still have our manager.

"It could yet go to legal recourse."