Hey GrumpyKore, thanks for the shout out and the question (you too EaglesFan). The way I designed the KotR is actually pretty simple. I went to the contenders list (the rankings), and went through and picked 15 guys for the tournament, and left one random. I did matchups based on contenders ranking (Example: Orton was the #1 contender, so I gave him the #1 seed), feuds (Example: Christian at #8 seed, and Dolph at #9 seed. This way, they have a match together and the feud still holds importance), and general prestige (Example: Brock Lesnar being #3).
I had 5 weeks until Fatal Fourway, so I did the first two rounds across two different weeks of Smackdown, and then the quarterfinals the next week (so I'm left with four contenders). That way I have one free week between now and Fatal Fourway, to let the four wrestlers have some face the week before the match. I might do a tag team match, or two separate 1v1 matches, just to have the wrestlers interact before the title match.
A couple things happened, however, that I didn't control. For example, when Gabriel beat Edge, but then R-Truth showed up for the fight against Mark Henry. That was entirely CPU controlled, and sparked from the feud the two had been having before the tournament. Smackdown being in Chicago was a complete coincidence (I was initially going to pick the surprise contestant randomly) and I knew I had to use Punk. Sorry if this answer was longer than you were hoping for, but this month of my Universe has been more exciting than any thus far.
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