As many as 2,000 new jobs could be created in the construction of the new £150m Cardiff Indoor Arena.
Live Nation and builders Robertson have now been announced as the winning bidders to operate and construct the 15,000 capacity venue.
Entertainment investors Oak View Group are also part of the consortium.
Cardiff council leader, Huw Thomas, called the scheme "an exciting opportunity".
He said it could be as important for Cardiff Bay as St David's has been for the city centre.
It will be built in Atlantic Wharf and the Red Dragon Centre will be demolished to make way.
Mr Thomas said: "There will be voices asking 'how can the council afford to be involved in a project like this at this time', that's why it's important they know that this is a private-sector led proposal which the council is supporting.
"That means the private sector will be covering the lion's share of the costs and taking the vast majority of risk associated with delivering this project."
He said the council's commitment was less than 15% and could eventually be "significantly lower".
Russell Goodway, the council's investment and development member, said it was "really important" local residents benefit.
"The arena will be located in close proximity to many of Cardiff's most disadvantaged communities and we want those communities to benefit from the job opportunities which will become available," he said.
The consortium said in a statement: "We look forward to working in partnership with Cardiff council to bring this ambitious vision to life over the next few years."
It said the venue would be "world class" and bring economic benefits during construction and "for many years to come