Steven Davis could be leaving Ibrox in January to join up with Barry Ferguson in Birmingham City’s midfield. Alex McLeish is said to be preparing a bid to tempt the Northern Ireland international south to become part of his new-look Premier league side.

Unless Rangers find a buyer for the club in the near future it is inevitable that they will have to part with at least one of their big earners and McLeish is apparently ready to offer the club the chance to recoup the £3m fee they paid for Davis in 2008. Ex-Rangers manager McLeish has been given a £40m war chest by new City owner Carson Yeung.

Davis signed for Rangers from Fulham after a loan spell at Ibrox and has been one of Rangers’ consistent performers over the last eighteen months. He is reputed to be paid around £1m per year and though Walter Smith would be reluctant to lose the talented player, cutting such a sum from the wage bill would help Rangers in their bid to reduce their debt.

The dire state of Rangers’ finances has been laid bare in the last week following Walter Smith’s comments that Lloyds Banking Group is effectively running the club. Though Lloyds released a statement claiming they have no direct involvement in the Rangers’ day-to-day business the debt, said to be around £30m, means that any decisions taken by the board are made with finances as the primary factor.

Rangers have not paid a transfer fee for a player for eighteen months and unless a buyer is found for Sir David Murray’s shares they will be unable to add to the squad in the January transfer window. If forced to sell players, with Madjid Bougherra and Kris Boyd also rumoured to be the subject of interest from elsewhere, Davis may be the more palatable option for Smith. Rangers are short of cover in defence and have struggled to score goals on occasion this season but have options in midfield should Davis leave.

For McLeish, adding an established international with English Premier League experience fro £3m would represent good value. The Birmingham City manager has pledged to spend his transfer budget wisely and is looking to add quality to his squad without making big money purchases in a market where he could be competing with the likes of Manchester City.

McLeish operated under a stringent budget in his time at Ibrox and has admitted that it was difficult to take charge of Rangers when the funds heaped upon previous managers were not available to him. While McLeish will no doubt sympathise with Walter Smith, such an understanding would not prevent the Birmingham City boss from taking advantage of Rangers’ plight.

Ibrox is not the only Scottish stadium where McLeish has sent his scouts apparently. Reports in the press have also linked Birmingham with bids for Celtic’s Scott Brown and Aiden McGeady.