Three consortia have been short-listed to build and run a 10,000-seater stadium in Bristol.
Investment in the Arena could total £100m
Brighton International Arena; Quintain Estates and Development PLC; and SMG Orion were all selected.
The Arena will cover nine acres next to Temple Meads station, and is being billed as a mixed-use leisure and entertainment site.
The selection process is expected to be finalised by September and the Arena is scheduled to open in 2008.
Ian Thompson, head of operations at the South West Regional Development Agency, said: "We have taken an important step to delivering a major leisure facility for the whole region, which will help establish Bristol as a major European city."
The South West RDA and Bristol City Council have invested £13m so far in the project, which is expected to cost around £100m in total.