THE TASMANIAN State Government will contribute $15 million to a redevelopment of Hobart's Blundstone Arena – an upgrade that will increase crowd capacity to about 19,500

The stadium can currently accommodate about 16,000.

North Melbourne receives $1 million a season for playing two annual games in Hobart, as part of a deal funded by the Tasmanian Government, Hobart City Council and local businesses.

AFL chief executive officer Andrew Demetriou said the Tasmanian Government's initiative to match a Federal Government commitment underlined the AFL’s decision to play games in Hobart.

It would also boost the local economy and tourism, he said.

"The upgrade to facilities and crowd capacity at Blundstone Arena will enable more Tasmanians to attend AFL matches and attract more AFL fans to Tasmania to see their teams play for premiership points, many of whom will no doubt also extend their stay in the state as tourists," he said.

"The AFL’s experience in building ‘destination games’ in Launceston, Darwin, Cairns, Canberra, and the Gold Coast shows that combining a quality stadium with a tourism strategy is an effective approach to boosting visitation."

Demetriou also praised the efforts of AFL Tasmania and Cricket Tasmania to develop a business case for the redevelopment.

The AFL confirmed it will continue to complement the Kangaroos' premiership fixtures in Hobart with Hawthorn home matches in Launceston.