Sao Paulo city officials say the government will give tax incentives for the construction of a stadium to be used in the opening match of the 2014 World Cup.
The incentives are intended to help Corinthians upgrade the project of its already planned stadium, increasing its seating capacity from 48,000 to 65,000, enough to host the opening match.
Sao Paulo wants to host the opener but the government had said that it would not use public money on stadiums. Corinthians, meanwhile, had said it did not want to build a venue for more than 50,000 people.
Sao Paulo had been without a stadium project since Morumbi was dropped because of a lack of financial guarantees.
The Corinthians project has yet to be approved by FIFA