Bruce is Wigan's new boss, and Birmingham's co-owner insisted it will be a new chapter in Birmingham's history.
Sullivan: "We priced Steve out of a move to Newcastle three years ago.
"In his contract there is a £7m compensation clause. The reality is that I don't know whether anyone would pay that.
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"However, when we were approached by Dave Whelan, we felt — because we are nice people — that it would be morally wrong to stand in Steve's way again. We could have insisted on the £7m. But we have instead allowed him to leave for £3m.
"We could not foresee the effect that refusing him a chance to leave would have. We could quite easily have had a soured manager on our hands. In our position, that would have been courting disaster.
"Steve did a good job here. And he was well rewarded for it, contrary to what has been said in some quarters."
Former Wigan boss Chris Hutchings believes Bruce will inherit a stronger squad of players at the JJB Stadium than he left behind at fellow strugglers Birmingham.
Hutchings: "It is difficult, a couple of years back he was at the club for six to eight games.
"So people at the club already know him, he's got a good track record of getting people up and this year is going to be a big test for him.
"But you have to kind of hang in there and he has got a good squad of players.
"When he looks at the Wigan squad and the Birmingham squad he'll maybe think the Wigan squad is slightly stronger."