A FIRE that may have been suspicious has destroyed a century-old grandstand at a Melbourne football oval that was due to be the new home of AFL team St Kilda.

Police are investigating the circumstances surrounding the fire that caused about $1 million damage at the Frankston Oval in Young Street, Frankston in Melbourne's south on Wednesday morning.

The fire destroyed the historic grandstand, and a gymnasium and clubrooms below used by visiting football teams.

The oval is the home ground of Victorian Football League team, the Frankston Dolphins.

AFL team St Kilda plans to establish a $10.25 million, state-of-the-art training and administration headquarters at the oval in time for the 2010 AFL season.

The fire is believed to have broken out shortly before 2.30am when police were called by a passing motorist.

The grandstand was engulfed in flames by the time 60 firefighters in nine trucks arrived, Country Fire Authority (CFA) spokesman Craig Musselwhite said.

"Unfortunately it was totally involved and took just over an hour to bring under control," Mr Musselwhite said.

"It had significant historic value at a local level.

"The cause is not known and CFA fire investigators and police will attend the scene on Wednesday morning."

Police are appealing for any witnesses to the fire to contact Crime Stoppers on 1800 333 000 or to visit www.crimestoppers.com.au.