Organisers said the venue's 10,000-seat capacity, compared with 4,000 in the Big Top, meant ahigher calibre of artist should be attracted to the city.
Pops promoter Chas Cole said: "We intend to be exceptionally ambitious for the 2008 line-up and Madonna is right at the top of our wishlist."
The near-£800,000 cost of last year's event was revealed in a report published after an investigation by councillors into how the Pops was operated.
But Mr Cole and Jason Harborow, chief executive of the Culture Company, said they were satisfied the Pops provided value for money, despite the subsidy.