OAKLAND -- A well-connected Dubai financier and the world's third-largest privately held real estate firm are teaming up to invest in Coliseum City, providing a significant shot-in-the-arm to Oakland's effort to redevelop the sprawling Coliseum complex into a sports and entertainment center.

The investment group is composed of Colony Capital LLC, which manages investments totaling $32 billion, and Rashid Al Malik, an investor who recently served as deputy CEO of a multibillion dollar aerospace firm founded by the uncle of Dubai's ruling sheik.

Operating under the banner Bay Investment Group, LLC, Al Malik and Colony are slated to join Oakland's master-planning team for the Coliseum complex and help fund a new stadium feasibility study.

More importantly, they also want to take the lead in redeveloping the Coliseum complex, which is surrounded by parking lots and cut off from surrounding neighborhoods and city life.

"We are very enthusiastic about the opportunity to work in partnership with the City of Oakland (and) Rashid Al Malik ... to develop this unique property, which we expect will become a transformational and vital urban, residential sports and entertainment center for this city," Colony CEO Thomas J. Barrack, Jr. said in a prepared statement.

Mayor Jean Quan said she'd like to see a family-oriented venue that included a bowling alley, roller skating rink, shops, bars, homes and a high-end hotel.

"I'm thrilled," Quan said about the new investment team. "They are very successful and they have very deep pockets, so they can probably afford to do the project exactly how we would like it."

Coliseum City has long been dismissed as a pipe dream mainly because it envisioned privately-financed new homes for all three of Oakland's sports teams, even the Golden State Warriors, which have proposed building a new home in San Francisco, and the Oakland A's, which still pine for San Jose. It also calls for the development of a technology district near the Oakland International Airport.

While the master plan, which covers 800 acres on both sides of Interstate 880, would accommodate facilities for all three teams, officials said the final project could still be viable with only one or two new stadiums. The most likely sports partner would be the Oakland Raiders.

Al Malik's firmm, HayaH Holding, and Colony have both shown interest in similar types of projects. They recently joined forces in a failed bid to purchase AEG, a major entertainment venue owner and operator that developed LA Live, the sports and entertainment center anchored by the Staples Center in downtown Los Angeles.

Colony has already been active in the sports and leisure market. It owns Miramax Films, the Fairmont chain of hotels and previously owned the Paris Saint-Germain soccer team.

The firm's involvement in particular makes the East Oakland development appear more plausible, said Robert Boland, the academic chair of sports business at New York University's Tisch Center for Hospitality, Tourism and Sports.

"When you think of Colony Capital and its hotel properties, its casino properties and its entertainment investments, this kind of project would have some resonance," he said.

The upcoming study will delve deeper into the market for a new Raiders stadium at the Coliseum site. Raiders owner Mark Davis and a private consultant hired by the city have both said recently that the local market would only support a roughly 58,000-seat stadium at the Coliseum site.

There are concerns among Oakland's planning team that such a facility, which would be the NFL's smallest, wouldn't attract major events like a Super Bowl or successfully anchor an entertainment district.

"Our team feels that the market can support something bigger than that," said Ed McFarlan, a principal of JRDV Architects, which is among several firms working on the project's master plan. "If we're going to privately finance a stadium, it needs to be a multipurpose entertainment venue."

Oakland has earmarked $3.2 million in preliminary work for Coliseum City, including funds for site planning and environmental studies that will both lay out the grand vision for the project and consider fallback options should the sports facilities not materialize.

The City Council still must approve the new investors coming on board and also agree to extend the planning team's exclusive negotiating agreement, which expires later this month.

The council is scheduled to discuss the project in private on Tuesday. A public discussion on extending the negotiating period and bringing aboard the new investors is scheduled for Oct. 8.

Contact Matthew Artz at 510-208-6435.