Tournaments are designed so you can't finish at lower levels without spending gold, but they give you the chance to strategize, see how your team is doing, and possibly win gold if you can get to level 20.
If you check out the levels for most of my winning dragons, I only have about 6 epic dragons and everything else is lower. I do that every tournament. I don't have diamonds, have 3 champions that rarely win - I think my losing helps everyone else's odds lol. But it's possible to get really far by having the right mix of dragons. Early on in tourneys I made a spreadsheet matrix type thing to analyze my dragons while keeping track of my battles. When the best dragon for a fight I didn't have, I noted it. If I was using a dragon over and over, it went on my list to level first.