The council unanimously approved the deal 12-0 during a meeting that drew celebrity athletes including Kareem Abdul-Jabbar and Rodney Peete. Union construction workers, high school football teams and business groups also packed the chamber to support the deal, which includes a $315 million convention center hall, stand-alone ballroom and park plaza.
Not everyone is in favor of the 76,000-seat stadium. It has been a source of controversy with a number of lawsuits filed against the project. Activists are concerned about the impact it will have on the environment. Advocates for low-income housing are worried about what impact the stadium project could have on the neighborhood and residents who live around the area.
Friday's approval came less than two weeks after AEG, also the owner of Los Angeles' Staples Center arena and the NHL's Los Angeles Kings, went up for sale. A deal to buy the company would mean a major shift in sports and entertainment in the region and around the world.
Supporters and AEG officials insist they've come too far and invested too much to turn back now.
"We have almost $50 million into this project. You don't walk away from a project like this. You don't give up on a project like this. This is our key vision going forward. This is going to be a key cornerstone of this company going forward," said AEG President Tim Leiweke.
The downtown project is not the only stadium project in town. There is another proposal for the city of Industry being floated out by rival group, Majestic Realty.
The big question: Is there an NFL team that will play in this town? No team has been announced so far, and without an NFL team, both projects look questionable.
Football fans packed City Hall on Friday, and many of them are hoping to see the L.A. Rams on the field once again.
"We think the Rams are in the conversation and I think that Los Angeles provides them a better home than where they currently are," said Tom Bateman with the Bring Back the L.A. Rams Fan Club. "Right now, there are certain stadium issues in St. Louis that will lead the Rams to look to L.A. very strongly."
City officials hope the agreement with AEG will eventually attract a team to one of the nation's most lucrative media markets, where fans have pined for the return of professional football since the Raiders and Rams fled Southern California in 1994.
The Associated Press contributed to this report.