"We weren't allowed to change his contract under the takeover rules of the Stock Exchange, we couldn't match what they offered so we did what was best for the club and released an unhappy manager who wanted to go for substantially more money."
In the immediate aftermath of relegation at the weekend, Sullivan, his family and co-owner David Gold were subjected to abuse by some sections of the crowd.
Initially, Sullivan he said he did not want to be at the club next season but 24 hours later his views had moderated slightly.
"I still feel 90% the same," he added. "Time heals a little bit but the reality is that we took terrible abuse and it's a sad state in English society that people think they can swear obscenities at you like that and think it's acceptable.
"I think fans fall out of love with you and, as a consequence, you fall out of love with the club.
"Generally, fans like a change - very few owners last 15-and-a-half years like we have but there is an English attitude that there is something better round the corner. Unfortunately there isn't.
"The Sultan of Brunei or the Saudi royal family don't want to buy Birmingham but that's who the fans want."
Although manager McLeish failed to save the club from relegation, Sullivan said he was confident the former Scotland boss could turn the club around.
"Judge him over five seasons," he said.
"There won't be a mass exodus of players. He might want to bring in a few of his own as he has inherited a team apart from bringing in a few of his own.
"There are some fringe players we'll want to dispose of, we might of dispose of one or two first-team players to bring in some fresh faces but I would imagine seven or eight of the players who played on Sunday will line up in the first game of the Championship."
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