Aston Villa has agreed to pay compensation to Birmingham after Alex McLeish quit the club to join its crosstown rival.

Birmingham had threatened Villa with legal action after last month's defection, but the clubs announced Monday that an ''agreement has been reached between the parties ending the legal disputes surrounding Alex McLeish's departure.''

Their joint statement says ''Aston Villa has agreed to pay Birmingham City an undisclosed figure following negotiations whereby the parties have agreed to bring to an end all disputes.''

McLeish left Birmingham after the club won the League Cup - its first trophy in 48 years - and was then relegated from the Premier League.