In my eyes, if you are going for a hunger games type deal, you should make it a grand event meaning hosted like once a month. Each squad can choose one or two members as their "champions" and those are the people who would fight. Winner will obtain a prize for the whole guild they are representing be it a hat a pet or whatever.
It seems if you just add this as an ongoing thing, it will just be another gmap of showdown, which in turn could get boring. Making it a grand event as such would boost anticipation for it and would encourage people to shine through with their pk abilities within their squads so they can be nominated.
Just my opinion.