Birmingham boss Chris Hughton had hoped to become reunited with Ranger, having developed a fruitful working relationship with the 20-year-old during his time at St James' Park.
However, having been relegated to the Championship, the Blues are not in a position to sign the striker on a permanent basis.
Hughton made contact with his former employers earlier this week in an attempt to set up a loan agreement, but his approach was rebuffed.
Newcastle boss Alan Pardew has decided that Ranger does not have a future on Tyneside, so the Magpies would rather sell than agree to a temporary arrangement.
They thought they had agreed a £1.5m deal with Blackpool earlier this month, only for talks to collapse when the Seasiders were unable to agree personal terms with Ranger's representatives.
Newcastle officials are hoping those discussions could yet be resurrected, and are also aware that a number of other Championship clubs are monitoring Ranger's availability.
They could yet agree to a loan move with a view to a permanent signing at the end of it, but are understood to harbour reservations about Birmingham's ability to make such a firm financial commitment at this time.
As a result, they have opted to bide their time rather than agreeing to a loan deal that could have seen Ranger back on their books by the turn of the year.
Newcastle's willingness to sell the striker reflects their confidence that a new attacker will be arriving on Tyneside before the start of the Premier League campaign.
That attacker could yet be Mevlut Erdinc, although the Turk's reluctance to travel to England for talks hardly augurs well.
The Magpies are willing to give the 24-year-old until the end of the week to make a decision on his future, but if they do not receive a positive response by then, Pardew and chief scout Graham Carr will look elsewhere.
Paris St Germain are due to play in the Emirates Cup in London this weekend, and it will be interesting to see whether Erdinc is named in their squad.
Pardew flew back from Newcastle's pre-season tour of the United States yesterday, and despite a litany of problems that began when Ranger, Joey Barton and Yohan Cabaye were denied visas to even travel to America, he has declared the trip across the Atlantic a success.
We've had some really good training days and some great games, he said. Overall, the tour has been very constructive for us and we've had a defeat, a draw and a win.
We'll look at it and see if it's something that we want to do again because the competition was great. It would be a good place to come back to because we've gained a lot of friends.
On a tour like this you learn about the players' personalities and get to know them a little bit better. They are a good set of lads who want to do well.