City have told Falkirk to forget about any cash for Mark Stewart.

The Scottish club believe they are entitled to a fee after offering a new deal to the striker last season before he turned 23.

A club statement issued after he left for the Bantams said they had “fully protected their rights for training and development compensation”.

Falkirk also claimed they would refer the matter to a FIFA tribunal if an agreement was not reached.

But City, who today made 18-year-old midfielder Paddy Lacey their sixth summer signing, are adamant that they will not be paying a penny.

Joint-chairman Julian Rhodes said: “We don’t believe there’s any compensation to pay.

“We’ve spoken with various organisations, including the PFA and English Football Association, and we’ve had a look at one particular case. We don’t think we have to pay anything.”

Peter Jackson has been pleased with how Stewart has settled in training after missing a couple of days with a slight thigh problem.

He said: “Stewart has done well and is looking very sharp. In the two games we’ve had, he’s been lively, coming off short, running at angles and scoring a couple of goals.

“He can get fitter, as they all can, but that will come. The early indications are very promising.”

Former Sheffield Wednesday youngster Lacey, who has penned a one-year deal, is expected to start in the development squad.

He spent two days on trial at City in April and Jackson was keen to bring him back.

Lacey said: “It was doom and gloom when I came last season. The vibe with the team then was totally different.

“There was a lot of uncertainty and it was hard for the players. People say it doesn’t affect you but I could tell that it must have.

“The gaffer wanted me back and I wasn’t sure. But we stayed in contact and in the end it was a good decision.

“It’s a totally different place now and everything in the background is starting to take off.

“I did have other offers but this is a better set-up. The gaffer, Colin (Cooper) and Wayne Allison have given the team a new lease of life.

“I don’t think the gaffer’s got anyone’s name on the team sheet yet – I think it’s every man for himself.”

Jackson added: “Paddy has stood out and is definitely one for the future.

“Like with Scott Brown, going forward we have to develop these youngsters through the system.”

But City have decided not to sign Wales under-19 international Jay Gibbs.

* Tommy Miller signed a one-year deal to join Huddersfield Town yesterday. The move came just 24 hours after he turned down an offer from the Bantams.