I just finished The Dark Tournament Arc from Yu Yu Hakusho (very late, but man was it amazing). I would like to run an in-game arc based around the same concept. Teams of 5 enter the tournament and engage in combat. At the beginning of each round of the tournament, the team captains (the group could rotate or keep the same person) meet up and decide the terms. In the show there were the following:

• 1 v 1 - first to 3 wins
• 3 v 3
• 1 v 1 - can fight as many times as you want until no one is left on one team
• 1 v 1 - match ups assigned randomly (Assigning each character to a face on a d6 with a 6 being a reroll)

The thing is, obviously you want the group to win, just because an entire arc dedicated to a tournament, only to lose is anti-climactic lol so I would like to have ways to balance this. Are monsters that are CR equal to 1 player of their level an even fight? Should teams be "player characters" i.e. if the team is level 5, then have the other team all be characters with 5th level class abilities? OR should the opposing team be lower leveled, such as a CR one scale less than "an equal fight" or if the the party is 5th level, then characters with 4th level class abilities. Or a mix, enemies with a 6th level, couple 5th, and a couple 4th.

And I would also like suggestions on what happens, should the team lose. Fudging rolls here and there seems easy, but if in a situation there's nothing I can do at that point, what are some ways to have the team re-enter the tournament? Reveal the other team cheated? Have a loser's bracket?

Any ideas are good thanks!

P.S. - I know D&D is a team combat game, but I thought this would be a cool way to give each character their time in the spotlight.

Don't be so quick to fudge rolls to get them to win. It's sloppy DMing and takes away the players agency. Not every fight has to be a victory.

If another team wins the tournament, you set up a fantastic rival group for the players who can provide extra content and stories going forward. 

If I were you, I would make the opposing team slightly more powerful than the PC’s team by stats, but give the players chances to exploit “player’s advantage” - for example, the PCs can try to know about their next combat opponent(s) in advance, their strengths, fighting styles and weakness, their team’s sequence of showing up (if you would be playing on a team 1v1), etc. The fight should be (or at least, look) hard, but being able to defeat opponents more powerful than you would be a huge achievement for players ;)