A multimillion-dollar deal has been struck with a new naming-rights partner for Palmerston North's main stadium, which will be spruced up in stages.

Palmerston North mayor Grant Smith concluded the deal with Central Energy Trust chairman Sir Brian Elwood and deputy chairman Rod Titcombe at the venue in Pascal St on Wednesday afternoon.

The venue will now be called the Central Energy Trust Arena.

New signage is expected at the stadium within the next four to six weeks.

Under the deal the two organisations enter a 10-year partnership to develop the sports facility.

The memorandum of understanding will see the trust invest a total of $2.2 million and the city council $17.5m over a 10-year period. The council money had already been budgeted in its long-term planning.

"We have secured the future of Arena," Smith said.

Cities were often judged on the quality of their facilities, he said.

"We've got a stadium to be proud of.

"For the size of our region our stadium is still credible and now we have a long-term plan underpinned by a significant partner."

Smith said it was significant for both the stadium and the region.

There have been calls for a roof over the southern embankment of Arena but that possibility still looks a decade away.

The council earmarked $2.8m to cover the seats, but the item is at the bottom of a priority list.

Elwood said the investment aligned with the trust's aim to contribute to significant amenities to benefit the wider region and the country.

"We are in it for the long term," he said.

Elwood said the staged development made a lot of sense. Neither the council nor the trust would have been able to make the investment as a one-off without compromising other projects.

"Our announcement illustrates two things; support for major regional facilities and support for long-term planning and funding over a period of years," he said.

Elwood said the investment would benefit people who live in the region and encourage economic development.

"Palmerston North is the centre of a much wider area than just its own city boundaries.

"For the future, the significance of Palmerston North and its surrounding region will grow as there is a recognition that development must take place other than in Auckland," he said.

"The development of Arena will be one of those important amenities that will be a catalyst and a supporter of economic growth and development."

The signing of the deal was personally significant for former Palmerston North mayor Elwood who will step down as trust head next month after a 58-year professional career.

He was involved in the negotiations and subsequent legislative changes in the late 1960s when the city council took over what was then known as the Showgrounds from the A&P association, which had run out of money.

City council project investment co-ordinator Clint Dunstan was involved with negotiations leading to the partnership deal.

He said there was plenty of interest, but the council wanted a long-term partner.

"We wanted someone who was invested in the region as well as the stadium," he said.

Central Energy has pledged annual funding of $220,000 to be spent in consultation with the council, with the provision the spending is on energy-related projects.

Although the budgeted investment is annual, there will be spending flexibility depending on the project.

The deal covers the whole arena complex, instead of just the main stadium. It allows second- and third-tier additional sponsorship, which means the B&M Centre and the Steelfort Lounge will remain.

In 2013, a review of the facility identified development priorities.

Planned projects include improved lighting, converting the back fields into four, a new stand on the far embankment, improved lighting and retractable seating in the new indoor stadium, a new entranceway and new changing facilities.

Known as FMG Stadium until the end of June, the former sponsor chose not to renew its naming rights for the main stadium earlier this year.

FMG took up the naming rights to Arena 1, also known as the Oval, in 2005 in a deal worth more than $500,000.

The stadium has been known as Arena Manawatu since July.

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