Birmingham made an audacious attempt to sign Barcelona striker Henrik Larsson before snapping up his former team-mate at Celtic, Chris Sutton, on a short-term contract.
Blues manager Steve Bruce made an enquiry last week to the Spanish giants regarding Larsson and was initially given some encouragement.
But Barcelona then had a change of heart and Larsson decided to pledge his future to the club for the rest of the season despite his frustration at not holding down a regular place.
The absence of Samuel Eto'o - on African Nations Cup duty with Cameroon - was a factor in Barcelona deciding they needed to keep Larsson as back-up.
Bruce then turned his attention to Sutton and the 32-year-old has put pen to paper on a contract which will keep him at St Andrews until the end of the season.
Birmingham owners David and Ralph Gold and David Sullivan will fund the deal using their own finances.
A statement from Sutton, released to PA Sport, read: 'I had five great years at Celtic under Martin O'Neill. I would like to thank the players and stafff at Celtic for making me and my family so welcome.
'I would also like to thank the Celtic fans for their tremendous support. It has been very disappointing for me to leave Celtic but, under the circumstances, I felt that I had been left with no choice.
'I'm looking forward to playing for Birmingham City. Steve Bruce and Karren Brady could not have done any more to make me feel welcome and I'm looking forward to getting started for Birmingham City.'
Everton, Fulham and Blackburn were also interested in Sutton who scored 63 goals in a 127 matches for the Hoops, whose manager Gordon Strachan expressed his disappointment at losing the player.
He told the club's website, www.celticfc.net: 'It is obviously a huge disappointment to lose a player of Chris' quality.
'The club has granted Chris his wish to move on and I would like to wish him all the best for the future.'
Celtic chief executive Peter Lawwell added: 'Chris has been a magnificent servant to Celtic in the five-and-a-half years he has been here.
'He has been professional in his dealings and all at Celtic would like to wish him all the best for the future.'
Blues chairman David Gold admitted he was 'absolutely thrilled' to have signed Sutton.
He told Sky Sports: 'He is a player of great pedigree having played at the highest level. He can play up front but has been playing for years at midfield and at centre-back. He is a great, versatile player and I'm sure he will be great for Birmingham City.
'We have a great tradition at Birmingham that despite the fact the funds aren't available we seem to find them and in this case we've brought in Chris Sutton and we're absolutely thrilled.
'All of the extra signings during this window will be funded by us, the Golds, and David Sullivan. We are covering all of the expenses of this particular signing.'
Bruce is also showing an interest in Polish striker Grzegorz Piechna who has just made his debut for his country.
Peichna has scored 16 goals in 17 games for Corona Kielce during the current campaign.
Bruce is hoping to take the player, valued at around £700,000, on trial during the mid-winter break in Poland.