Bruce has agreed a £2million-a-year deal to link up with Wigan chairman Dave Whelan, while Birmingham No 2 Eric Black is expected to quit within the next fortnight as Sullivan and his board begin the search for a new boss.
"We priced Steve out of a move to Newcastle three years ago," he said. "In his contract there is a £7m compensation clause. The reality is that I don't know whether anyone would pay that.
"However, when we were approached by Dave Whelan, we felt - because we are nice people - that it would be morally wrong to stand in Steve's way again. We could have insisted on the £7m. But we have instead allowed him to leave for £3m.
"We could not foresee the effect that refusing him a chance to leave would have. We could quite easily have had a soured manager on our hands. In our position, that would have been courting disaster.
"Steve did a good job here. And he was well rewarded for it, contrary to what has been said in some quarters."