[quote=@Inkarnate]

Honestly I am surprised you guys don't design tournaments this way in the first place.[/quote]

We do, or at least, some of us do. Rilla's WoTW has numerous background machinations going on throughout the fights and the lobby interactions were very meaningful when I played. My character stopped a girl from hanging herself in the lobby in the first one I joined, there were poisonings and betrayals throughout. Skallagrim's Nexus of Worlds always had a strong story arc running through it as well, the last one was essentially a tournament as a cover for the possession of a key that basically decided if the Nexus (multiverse) crumbled or hung on in there. Luckily my character, who won, had a personal vendetta of sorts against the evil, and when he got the key he sealed him up tight.

I much prefer tournaments that really play up the 'lobby' angle at the very least, they give me something to work with, as my characters are rarely prize fighters it's hard to explain their presence in a tournament. In the two seasons of the GCL I participated in, my first character was coerced by people who kidnapped his sister, who he later rescued, and my second character was doing it to get close to another competitor away from his bodyguards, who he subsequently kidnapped. 

Generally, the tournaments that don't push forward a story angle tend to be the forgettable ones, at least in my experience.