As a designer, my first question would be this: Do they value their business? If so I'd tell them to really think how they invest their money. I have little faith in competition based service selection.
Here are some of the reasons:
1. Design process
A good design project consists of stages that allow the designer and client to form a partnership. The designer builds up a picture of the clients needs by asking the right questions. Questions that a client may not have thought to put into a spec. This is a fundamental part of all successful design. It answers the right questions. In short, I have yet to see a well drafted design brief on a competition site, and as a result the 'competition master' will often feel the criteria have not been properly met.
2. Designing to win
I liken design competitions to this analogy:
Ask 500 building contractors to build a wall, offer them a prize for the best one - choose the nicest wall and we'll pay them $000's. It's not a big wall, won't take them long...
In other words, I think I know what the contractors would say if you offered this model for selection... Speculative work in design is a contentious subject at the best of times, but when the competition casts such a wide a net the resulting 'walls' are unlikely to stand up to a battering.
Is what you see, what you get? Does the design have structure? Is it really good typography? Will it hold a users concentration? Is it presented in a way that pushes focus on most important content? Is it made with the build in mind?
All too often the design might meet the spec on first impression, but the nuts and bolts of the design have been neglected. Logo's are a prime example of this. There are hundreds of entries, that if chosen, would be so hard to manage it's untrue. Colour, format and scalability for example. There are constraints and factors that a client does not need to know, but needs to understand. A designer worth his/her salt will explain this to their client, demonstrating how it will work in the real world.
If there is no governance over the people who enter, you may find yourself working with an inexperienced hobbyist. Maybe one who doesn't understand the concept of deadlines, who uses incorrect tools/formatting and has no experience of working with developers. Would it not be better to forge a relationship with a good designer/design studio? One you can trust, who's business it is to design and develop sites every day? One who truly understands the medium and has the folio to prove it.
You get what you pay for. I truly, 100%, believe this. It's rare to find quality on competition sites like this. The designers who are good enough, are working on briefs for clients who understand that there's the right way to do it, and that is not for peanuts. Now I'm not saying that you are going to offer peanuts, but these sites do tend to attract monkeys.
My best advice, find some good (local) designers, with good folios and a good reputation and ask them to show their credentials and to produce a quote for the work. You can then forge a relationship with them, like you might a car mechanic, plumber or architect.