!Undertaker!: the entry fee is used to form the prize - the more players enter the tournament the bigger the prize. The chances of a particular player to win are smaller but the reward if (s)he does is much bigger.
The way you're suggesting, the more people enter a tournament, the less the chances are of winning and that 1 year rook prize or whatever seems to be further out of reach... Especially considering you still need to spend something to enter that tournament - it doesn't seem as attractive to me somehow...

But of course, that's just my personal oppinion... others may think otherwise.