This thesis addresses the opportunities and difficulties that can occur in the creation of an innovation arena concerning sustainable city solutions. A case study was conducted of the Stockholm Royal Seaport project and a model for the management of an innovation arena was created. Three critical factors were discovered which were commitment, collective risk taking and trust and their connection to the overall common vision for an innovation arena. Conclusions after analyzing the critical factors was that clear contracts needs to be established and that third party involvement in the process of searching, qualifying and coaching of involved actors can be helpful in the process of developing an innovation arena.