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fp4 and I recently discussed an integrated system for people to host their own [round robin style] spar leagues. It goes in rounds and at the end of each round a visual league table is generated based on points: 3 for a win, 1 for a draw, 0 for a loss. Everyone spars everyone in their own time and at the end of each league the person with the most points wins. Gralats required for entry to put into a winners pot, but also to hold people accountable for dropping out when they're losing.
This was aimed towards having sparring activity spread out throughout a season, and the ability to host your own would enable smaller groups to participate away from the 'better' people. I don't know if it would be open to everyone being able to saturate the system by starting their own league, or restricted to a few proactive individuals in the community who are interested in hosting. Perhaps an 'official' league can be hosted whilst non-participants of this are able to host their own. I don't know, it was just something that came up a few days ago.
But yes, the reason why a singles spar tournament hasn't been done before is because of numbers.
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Sounds like a great idea if you could make it work. Maybe it could have the options to choose from 1v1 to 5v5 leagues? Only downside to that I see is that the higher you go the harder it is to schedule matches, I think at least 2v2 would work fine though.