Is Six Flags or Cedar Fair Coming Down to Florida?

By Markets Fool.com

Image source: Universal Orlando.

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The already crowded theme park market in Central Florida could be gaining a new competitor. The Orlando Sentinel's Growth Spotter is reporting that a large U.S. theme park developer -- one that doesn't have a presence in the area -- is negotiating on parcels of land in Orlando that could top 200 acres. Sources claim that the theme park operator would team up with international partners to develop the site with a theme park, a water park, and hotels.

We know that we're not talking about Disney (NYSE: DIS), Universal Orlando parent Comcast (NASDAQ: CMCSA), and SeaWorld Entertainment (NYSE: SEAS), since they already have a heavy presence in the area. Disney World, Comcast's Universal Orlando, and SeaWorld's Busch Gardens Tampa and SeaWorld Orlando combine for eight theme parks and another six water parks in Central Florida.

That opens the door for Six Flags (NYSE: SIX) and Cedar Fair (NYSE: FUN) as major regional amusement park operators that may finally make a big push into the booming Florida market. They're not the only possible players in this scenario.Palace Entertainment -- the U.S.-based arm of Spain's Parques Reunidos -- operates several leisure parks in this country, including Kennywood and Lake Compounce. Sources telling Growth Spotter that it's a U.S. operator with international partners makes California-based Palace a strong contender. There's also Dollywood and Silver Dollar City parent Herschend Family Entertainment, where Joel Manby ran the show before being tapped as SeaWorld Entertainment's CEO last year.

There are several other small players, but the story narrowing down the unnamed potential developer as a "large" stateside operator makes it a safe bet to limit the scope to Six Flags, Cedar Fair, Palace, and Herschend.

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There's big money to be made in Central Florida. Disney, Comcast, and SeaWorld entertained a combined 81.5 million guests last year, according to industry watcher Themed Entertainment Association. Those 8 parks were among the 11 most-visited parks in the country, with Disney World's Magic Kingdom once again on top. The country's four busiest water parks also happen to be owned by Disney, Comcast, and SeaWorld in Central Florida.

Six Flags diving into Florida has been rumor-mill chatter for years, and Cedar Fair would also love a piece of the year-round market. The biggest stumbling block has always been the costly buildout. Six Flags, Cedar Fair, Palace, and Herschend can get better deals by acquiring distressed parks instead of building out new ones. The problem is that there are no established parks to be had, at least not in the traffic hotbeds of Orlando and Miami. They would have to start from scratch, and that's where an international partner willing to write fat checks would come into the picture.

It will take several years before a potential park opens to the public, and the chances are high that things will fall apart along the way. One of the parcels being negotiated for was once the proposed site of an amusement park that would feature only top-notch thrill rides. Neighbors shot it down five years ago. This still bears watching, especially if you're Disney, Comcast, or SeaWorld. Six Flags or Cedar Fair staking a claim on Floridian soil would likely result in a park that charges much less for single-day admissions and annual passes than the leading national theme parks. This would eat into the visits from locals, and it could be a pretty big deal given the land's proximity to Comcast's Universal Orlando resort. We're in the early stages of this story, but it could be one that resets the theme park scene and value proposition in Central Florida.

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Rick Munarriz owns shares of SeaWorld Entertainment and Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.