To be called the American Airlines Center, the arena will be one of the most expensive built in the country for the two sports.
American Airlines will pay $195 million over 30 years for the arena naming rights and for marketing programs with the teams.
But the $325 million brick, limestone, glass and steel structure is expected to cost about $100 million more than original cost estimates.
Officials said the $100 million of additional money for the arena is needed to make it larger than originally planned and for extra amenities the team owners sought.
The city's $125 million share of the cost and another $12.5 million to extend nearby roads will be paid through higher hotel and car rental taxes. But team owners and city officials said that despite the higher cost, the city's share will remain capped at $125 million.
When completed , the 815,170 square foot arena will seat 19,200 for basketball, 18,000 for hockey and 20,000 for concerts. It will include 1,600 club seats, 144 luxury suites, restaurants, and a private club.
Plans for a new basketball and ice hockey arena in Dallas, due for completion in autumn 2001, have been unveiled by city officials.
