McLeish led the Blues to second in the Championship last season
Birmingham manager Alex McLeish says he has already overspent his transfer budget for the summer as he continues to pursue the Gijon midfielder Michel.
"We have overspent now in the budgets that the board put down at the start of the close season," he told BBC WM.
"I'm aware of that, so if they were bringing anybody in [after Michel], maybe it would be a loan deal.
"And again we would still be pushing the borders out in terms of the money that we're spending."
McLeish hopes the planned move for Michel will go through during the next week.
"We're still negotiating with Gijon," he said.
"We hope we can meet the player later on this week. We won't see him for the weekend, it'll be too tight for that, but we would like to try to have him in the squad for next week."
McLeish broke the club's transfer record in July when he signed striker Christian Benitez from Mexican side Santos Laguna for a fee which could eventually rise to £9m.
Centre-half Roger Johnson was brought in from Cardiff for £5m, while former Coventry defender Scott Dann and Rangers midfielder Barry Ferguson were among other acquisitions.
Despite those additions McLeish knows his squad will be stretched to the limit by the demands of the Premier League.
"I think that it's tight, in terms of the overall quality and personnel," said the Blues manager.
"But can this team stay in the Premier League? Can they make their mark? Yes, they can - with their spirit.
"But sometimes in the Premier League you need the quality, speed, concentration levels - everything like that. All those ingredients are what makes the difference between the elite leagues and the leagues below."
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