So...let me spin a yarn for you about what's going on in my 4th edition campaign, and what I was thinking of doing...
So, a Kingdom has lost it's Royal Champion in the end of it's last war, but the only real remnant they had to bring back was his magic sword. Once it was enshrined at the temple in the capital city, it was found that it could no longer be moved, it's weight beyond that of a mere mortal. My players have tried to move the sword themselves in usual player curiosity, but of course, to no avail. They're only 3rd level, and none of players have done anything that the spirit bound in the sword would find worthy enough to allow one of them to wield it.
Besides that, bad mojo is starting to move in the world, old gods and dark forces making their move and all that. The people of the kingdom are afraid, and the previous royal champion had been a sort of inspiring figure of courage and bravery. The Queen, the Champions lover in life, receives visions that it will be her choice to decide whom the inheritor of the Champions mantle, as the right to wield the magic sword, will be. So, my plan was...is that she decides to hold a grand melee tournament to decide who of her realm is the bravest, and the strongest, capable of leading her people in the dark days to come.
Granted, the players could enter this tournament as a group...but there can only be one Champion. There's only one magic sword. If only one person enters, what do I do with the other players? I imagine I'll have the one person enter and everyone else will just have to spectate during matches, or everyone will enter, and then I have to deal with butthurt players upset that they got beat out by their companions.
So then, how would you guys approach a tournament-like scenario like this?