Sydney wants to succeed Melbourne as Australia Open host when the latter's deal to hold the Grand Slam ends in 2016.
Plans are afoot for a multi-million dollar stadium at Glebe Island as the New South Wales government seek to boost tourism after being accused of becoming complacent following Sydney's hosting of the 2000 Olympic Games.
Melbourne aim to retain the event, which is worth more than Australian dollars 100 million (£38 million) to Victoria's economy, while Shanghai, Dubai and Abu Dhabi are reportedly hoping to host a Grand Slam.
Events NSW's chief executive Geoff Parmenter confirmed Sydney's interest.
"The Australian Open tennis is arguably the best annual event in Australia," he told the Sydney Morning Herald.
"I think any events company in the country would be negligent if they didn't have it somewhere on their radar.
"The Glebe Island site is the subject I think of quite a bit of interest because it is pretty much the last clear piece of prime harbour-side real estate left."
No formal bid has been lodged but Parmenter confirmed discussions have taken place.
"We've talked to Tennis Australia about the Open," he added.
Tennis Australia's chief executive, Steve Wood, also confirmed Sydney's interest in the Open.
"We completely understand their interest in our event," he said.
"The bigger and better the Australian Open in Melbourne becomes, the more attractive it becomes to other major cities around the world."
Wayne Kayler-Thomson, who heads the Victorian Events Industry Council, urged the Victorian government to fight for the event.
"The government must pull out all stops to try and retain this event by improving infrastructure at Melbourne Park," he said.
"It is disappointing that NSW cannot be original and seek their own events instead of trying to cannibalise other Australian cities."
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