The city prosecutor's office said Karl-Heinz Wildmoser, 64, president of soccer team TSV 1860 Muenchen, was being held on possible charges of corruption, tax evasion and criminal breach of trust, according to a report by the German broadcasting service Deutsche Welle.
Wildmoser has stepped down from his team presidency, his lawyer said Wednesday.
The club president's son, Karl-Heinz Wildmoser Jr., and two other men were also arrested in the case.
Wildmoser's assets -- including cash, securities and property -- were frozen, as were his son's.
Both allegedly took part in a conspiracy to favor the construction company Alpine in the bidding to build the $345 million Allianz Arena, where the opening match of the 2006 World Cup is to be played. Alpine won the contract.
Authorities said that despite the scandal work on the stadium should continue on schedule.