THE ageing Ross Bandstand in Princes Street Gardens is set to be sold off to a private company in a move which would see it turned into a year-round arts venue and bring the council a multi-million cash boost.
City leaders are in talks about working with private firms to see long-awaited redevelopment plans finally get moving.
It is hoped that the move could lead to it being used for more open-air music concerts and also comedy and theatre performances.
The council's own plans for a transformation of the crumbling eyesore were mothballed indefinitely a year ago because of its cash problems.
But it is now hoped that a sell-off could see the work finally happen - and give the council a much-needed cash injection.
Councillor Tom Buchanan, the city's economic development leader, said: "We need to look at Ross Bandstand and ask if it is fit for purpose, are we using it enough and can we make it more of a venue with acts and shows happening a lot more than they currently are?
"A lot of developers are talking to us but we need to think of what is appropriate. There is a wider engagement to be had with city centre users, residents, the council itself, Festivals Edinburgh and others about what interest there is and what we would like to do."
When asked whether the council needs to sell the site to allow any development to take place, Cllr Buchanan said: "We have got to look at all options in these strained financial times.
"It is very difficult to get all of our capital programme funded so we have to assess how else we can do things."
The Ross Bandstand area was used as a festival venue for the first time in the summer when the Assembly Rooms created a new Fringe stage alongside bars and eateries.
The only major events currently held in West Princes Street Gardens are a free concert on the first weekend of the jazz festival in July and the traditional fireworks show at the end of the Edinburgh International Festival in September.
DF Concerts, the organisers of T in the Park, held a series of concerts a number of years ago at Ross Bandstand, featuring bands including Franz Ferdinand, Belle and Sebastian and Faithless.
But it has not held any gigs in recent years because of the cost of a temporary stage around the original stage. The previous Labour council administration brought together a taskforce of architects, engineers and concert promoters to draw up plans for a new look following the cancellation of the 2003/04 Hogmanay concert, which many critics blamed on the ageing structure's unsuitability for major events.Council leaders dumped the plans last year, blaming the economic downturn and a lack of funding. Insiders at the city council say they would hope a sale could generate several million pounds - which would give the council much-needed funds.
However, property experts say city leaders will need to be flexible as any developer would be taking a gamble.
Stewart Taylor, a director at property firm CB Richard Ellis, said: "You normally value something based on how much retail space there is, but with this the developer would need to invest significant amounts of money with no guarantee on the number of concerts they can have. That's why many of these types of facilities tend to be council-run."
He said any operator would be likely to include a retail element to bring in money.
The existing bandstand was built in 1935, although the first structure was created in 1877 and was paid for by drinks tycoon William Henry Ross.