Yeah I agree... reducing the rewards is the wrong way to go, that just makes those tournements even more meaningless.
They need to be a lot rarer, harder but also reasonably rewarding.
The other day I won tournaments in 5 consecutive, adjacent cities. One of which even ended up beeing besieged but the tournament still took place...
I don't even bother asking the arena master where tournaments are anymore, they're everywhere. By now they've become a bland little routine that I do while trading (If I can be bothered at all).