Allianz Stadium will be demolished and rebuilt. Credit:Peter Rae Allianz will be rebuilt with a capacity of 45,000 people and ANZ with a capacity around 80,000. This will allow the NRL to continue holding matches, including the grand final, at ANZ while Allianz is unavailable. Fairfax Media has previously revealed the revival of the plan to build a new stadium at Moore Park to replace Allianz. The decision on Thursday is a reversal of one announced by Mr Baird and Sports Minister Stuart Ayres last year, and follows bruising clashes among Sydney's sporting and political elite.

In September 2015, Mr Baird said his government would spend $1.6 billion partly gained from the privatisation of electricity assets on upgraded stadiums in Sydney. That plan included a new stadium at Parramatta by 2019, construction of which is already under way. The plan was then to build a new stadium to replace the 30-year-old Allianz Stadium at Moore Park, and to upgrade the former Olympic stadium known as ANZ at Olympic Park. But the proposal to prioritise another stadium at Moore Park faced strong resistance from sporting organisations. Sydney's NRL clubs preferred the spending at Olympic Park, closer to the geographic heart of Sydney. Also, the tenants at Allianz Stadium – Sydney FC, the Roosters, and the Waratahs – rebelled against the idea of a new stadium, in part because they would be displaced for years while it was built.

In response, Mr Baird took control of stadium planning in what was then a humiliating defeat for Mr Ayres, who had championed the idea of a new stadium at Moore Park. Under the plans Mr Baird announced in April, 2016, the priority would be ANZ Stadium, and there would be only minimal funds available for an upgrade of Allianz Stadium. The decision on Thursday represents a triumphant reversal of fortunes for Mr Ayres and the powerful Sydney Cricket & Sports Ground Trust, with whom he is close. Trustees include talkback radio's Alan Jones, business figure Tony Shepherd, and former premier Barry O'Farrell. By increasing the total spending on stadiums from $1.6 billion to around $2.3 billion, the government has in effect resolved the conflict between Allianz and ANZ Stadiums by finding money for them both. But it has done so at some political risk. NSW Labor leader Luke Foley has said he would not spend money on Allianz Stadium in Sydney's east. On Thursday Mr Foley criticised the decision and argued the total stadiums bill was $2.5 billion when $200 million the government spent on buying back ANZ stadium was taken into account.

Mr Foley said Allianz "won't host grand finals, State of Origins, Bledisloe Cups or the biggest Socceroo qualifiers. Why are we doing this?" "The government of the state is going to prioritise spending hundreds of millions of dollars on a white elephant stadium in the eastern suburbs of Sydney that won't host the biggest games," he said. "It'll be full once, possibly twice, a year. And Labor says that is a massive waste of taxpayers' money. The priority for investment has to be our schools and hospitals." Loading The Lord Mayor, Clover Moore, said: "Twenty million people visit the Moore and Centennial Parklands every year, while Allianz is a sea of empty seats on game days."

"The public interest is being steamrolled by an all-powerful SCG Trust and an ambitious Sports Minister who wants to play with the big boys – and a Premier who's lost control of her Cabinet," Cr Moore said.