The city of Orlando wanted a downtown arena long before there was talk of an NBA franchise. The arena site on West Livingston Street was approved in December 1983, at a time when concerts and other large-scale events were held at the Orange County Convention Center, which is several miles away from downtown. Discussions on financing delayed the project for several years due to concerns of the convention center losing money if an arena was built, as an arena would be a better venue for many of the events previously held at the convention center. By the end of 1985, the city and county reached an agreement on a financing plan that would delay the opening of the arena until the end of the decade (unless the county agreed) so it would not compete with the convention center. The planned site grew 50% from its original plan and consumed three extra blocks south of Lake Dot.

In 1986, support was growing to attempt to bring an NBA franchise to Orlando, and general manager Pat Williams knew that having an arena already under construction would be critical for expansion being approved by the league. Knowing the importance of the arena, the city voted to allow construction to begin before a study of its impact on the area was filed with state and regional planners. Ground broke in January 1987, four months before the NBA Board of Governors made their final decision to bring Orlando into the league.

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