"Finalizing our agreement with AEG and selecting Populous ... are both important milestones in this process," said Jim Murren, MGM Resorts International chairman and chief financial officer.
Las Vegas-based MGM Resorts and Los Angeles-based AEG expect their equity contributions will be augmented by private third-party financing from as-yet unnamed sources. Naming rights are on the table. No professional sports teams have committed to the deal.
The arena is expected to be a centerpiece of an outdoor pedestrian mall featuring restaurants and retail shops stretching from Las Vegas Boulevard to Frank Sinatra Drive, visible from Interstate 15.
Dan Beckerman, AEG president and chief executive, noted that his company spent years talking with potential arena developers in Las Vegas before signing with MGM Resorts.
"Bringing together the knowledge, experience and assets of our respective organizations, we will create an arena that offers fans the best live entertainment experience," he said.
Tuesday's announcement signaled an end to an arena proposal by casino company Caesars Entertainment Corp. for a similarly-sized arena on land it owns on the other side of Las Vegas Boulevard.
"Once you've got spectators going through the turnstiles the race will be over," said David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas.
"But this definitely looks promising. Not only is MGM buying into it, but an outside company that knows arena management."
AEG had been in talks with Caesars about building a $500 million arena funded by a 1 percent sales tax on purchases within a 3-mile radius. A ballot measure failed to make it to a statewide vote last November.
AEG also produces shows at the 4,300-seat Colosseum at Caesars Palace, home venue for singer Celine Dion.
Ted Fikre, AEG vice chairman, said Tuesday that the arena on MGM Resorts property proved the most attractive of several his company explored over the years in Las Vegas — without the "risks and challenges that have doomed prior projects relying on public funding."
Former Las Vegas Mayor Oscar Goodman tried for years to entice a developer to build an arena downtown that would be newer and larger than the Thomas & Mack center at UNLV. Goodman often said he wanted to attract a pro hockey or basketball franchise.
The Thomas & Mack opened in 1983 and hosts events such as the NCAA Mountain West Conference men's basketball tournament and National Finals Rodeo. It has a capacity of about 19,500 spectators for boxing events, and under 19,000 for basketball.
Three casinos have other large arenas around town, including MGM Resorts' Mandalay Bay Events Center. It can seat 12,000.
The parent company's MGM Grand Garden Arena opened in 1993 with a capacity of just under 17,000 spectators. It hosted the Pac 12 men's basketball tournament last March.
The Orleans Arena opened in 2003 adjacent to Boyd Gaming Corp.'s Orleans casino-hotel. It can seat about 9,500 for boxing, and just under 8,000 for hockey and basketball. It plays home to the professional minor-league Las Vegas Wranglers hockey team, and hosted Western Athletic Conference and West Coast Conference basketball tournaments.