Tickets/Wristbands/Badges seem to work best IMHO. That way a sponsor has a gauge as to their involvement in the competition.
i.e. If I have 2 sponsors for an event, and one donates $1000, and another $500, I might give the first sponsor 40 tickets, and the other 20.
Having the doors wide open to a sponsor can be dangerous, depending on your guest rules. i.e. "Guests of guests".
Some sort of sign of admission keeps everything reasonable, without hurting peoples' feelings.