The AEC was established by the Government of South Australia in response to rising demand from the people of South Australia (primarily Adelaide) for a suitable venue for international and local popular entertainment and sport. The 3,500 capacity Apollo Stadium, which had been Adelaide's primary entertainment and indoor sports venue since 1969, was increasingly considered to be too small to meet this need and by the end of the 1980s many international music acts were bypassing Adelaide (especially in the winter months) on their Australian tours due to the lack of a suitable indoor venue (the only other viable indoor venues in Adelaide were the Adelaide Festival Centre or the Thebarton Theatre, both of which only held 2,000 which was even less than the Apollo's capacity). To meet the demand for a new indoor venue that could hold upwards of 10,000 people, the AEC was announced in late 1989 and would be built at a cost of AU$44 million.