Here are all the things you need to consider:
The type of tournament
So what are your interests? By having a level of personal knowledge first, it makes acquiring resources much easier. It basically gives you a place to start. It will hopefully also give you a group of potential participants if you know people with similar interests. A tournament can be based on anything competitive. If it isn't competitive, make it competitive. Here are a few ideas to get the creative spark flowing, ridiculousness included:
Fifa 13 on PS3
Mathletics (yep - not a spelling error!)
Mortal Kombat on XBox 360
Football or 5-a-side
Super Smash Bros Brawl on Wii
For each idea you have to think:
What do I need?
How can I get it? (& What do I already have?)
How many other people will be interested?
What other tournaments are hosted?
If your answers are "Not a lot, quite easily, most people," and "not many", then it's likely that this is a tournament worth hosting. Obviously this won't be the case every time, but you have to think about what time you want to give to this project and how much money can be made at the end of it!
Venue and equipment costs
It is likely that these two issues are going to cause you the most problems. Firstly, what equipment is directly needed and where can you either find it, or put it. Think about everything! even a clipboard and a pen and paper for the day when you are running the tournament. Even a spare pen. Even a second spare pen! Don't let anything be missed out as this will spoil the day, upset a lot of people and dampen any future efforts at hosting a tournament.
And what venue will you use? Free venues will obviously reduce your costs but with paid-for venues, the quality of your event will shoot up dramatically. I suggest the best venue is one you can be sponsored for. Free but quality. Think also about what you want to achieve. If this is a competitive football match with serious participants, maybe try the local courts or sports hall. If this is a fun Call of Duty competition disguising a social mixer, why not try a local pub or cafe.
Try and think about:
What equipment should you be providing?
What equipment will participants bring?
What equipment might the venue have to offer?
Will you cover a shortfall?
Do you need 1 court/table/console/pitch and participants will take it in turns or will you need more and allow multiple games at once?
What is it that determines the score? How will you measure the winner? Sometimes this is fine to note down on paper if the winner is determined easily but think about the nature of the tournament!
Is anything likely to get broken/lost? Should spares be brought?
Try and leave as little as possible to chance.
Here you have 2 real options; money or an actual prize of some sort. The best option is again the more difficult; something more than just cash. The reasons for this is that you might be able to negotiate a trade with a sponsor which gives you a prize of a higher value than a cash prize you would be able to afford. This doesn't have to be your main sponsor but anyone who is willing to donate something, or sell you something at a discounted price so that you might be able to give it out to the winners. Do remember that in essence, you are then selling this product, so it has to be something people want. An easy way of ensuring this is having prizes related to the cause, though this can often be difficult!
If you only want to give away money, you might want to do a bit of research into what people would expect as a prize after going through the tournament and when considering their entry costs. If it seems like too much work for too little reward, people won't be interested. Here you can think of it as a wage. If the tournament will take a total of 5 hours per finalist and they win £50 on a £5 entry fee, that's £9 per hour; not too bad.
You also want to think about the amount of prizes. It's not always as simple as offering just one thing! How many times have you thought "Oh, I would enter the tournament but I know for a fact that if he/she enters, I have no way of winning"? Well, by offering 2nd and 3rd place prizes, you add the clause "but maybe I can try for the 2nd place prize."
Ticket prices and amount of participants
This is basically your income. I suggest calculating your costs first and putting in every effort to reduce them where possible so you know what amount you have to make more than to break even and start seeing profits.
For a normal knock-out tournament, it is usual to have 4, 8, 16, 32, 64, 128, etc. participants. This works perfectly and for simplicity's sake, it is best to not tamper with it. Then you need to set your ticket price based on a.) the prize fund b.) the length and type of tournament and c.) what you think is just and fair, compared to what is expected of participants and what others are doing. It is likely that your ticket price will be less than £5 unless you are aiming to host a professional tournament with a very worthwhile prize.
As an example, let's say you're planning to charge £3 for entry and your costs come to £100. By having a 64-man tournament, you will receive a net profit of £92! This sounds great, but you have to evaluate whether you think this will work. a 64-man tournament means there are 6 rounds including the final - will participants think this is worth it? This is a stage where you will need to keep going back over what you have planned so far and adjusting little bits and bobs until you are happy with the final result and are sure that potential participants are happy with it too!
Extra incomes or outgoings
Do always think about the extra costs involved. In particular - what is your marketing budget and how is it allocated? I'm mainly directing you towards printing costs here. They might be minimal but it is important to keep track else you might be very disappointed when calculating how much money you are making.
Another idea is charitable causes. An obvious reason for this is simply because it's a nice thing to do. Let's face it, there's always room for improvement when it comes to your own charity work and this is effortless and effective. It can sometimes also help the ulterior motive of getting more people involved! Think - how many people will get involved if they think they are being ripped off with their entry costs and how many of these won't mind because it's a good cause.
Note: If this is your tactic, you may wish to have all *profits* go to the charitable cause. By doing this you will need to count yourself as a cost, by working out your wage (let's say the tournament is going to get £100 in profit and you have worked 5 hours @ £7ph - £35 to you, £65 to charity).
The best and therefore most difficult method of getting an extra income for your tournament is sponsorship. It may take a long time and a lot of phonecalls, emails and rejections to gain sponsorship but if you manage it, you will see the benefits immediately. Once you have come up with a plan for your tournament, be sure to take it to all the local shops, bars, restaurants (its more likely that the independently owned places are more willing to help) and ask for their help. Show them why it is mutually beneficial and why they should help. This is really only going to work if you are honest and are able to communicate to them how you are helping them, so think carefully about what you require and what you can give. Here are some ideas:
What you can give:
Customer influx (if venue based)
What you can get:
Help promoting the event
This has been an introduction to creating your own tournament event. The rest is up to you. Remember, the key ingredient to a successful event is planning! If you have any luck or further tips for creating tournament events, we'd love to hear your comments :)