We dont have enough information to make statements like that or either to confirm that there will be custom lobbies. All we can do is just theorycraft with all our hopes high and pray that Nintendo will get this game right.
As far as I know, there was a report that you can't change rules in private lobbies, and a particular news site worded their article on the matter awfully and some people began spreading the false info that you can't have private lobbies at all. I'm hoping private lobbies will exist otherwise that's going to really damage the longevity of the game for me. I want matches with a team of my friends against a team of other friends. I don't really think competitive Splatoon can last without private lobbies because then you can't have any online tournaments or matches against other Squads.
I want to create a squad that plays Smash Bros. and/or Splatoon. I'll call it... SQUIDSMASH! Has a nice ring to it, right?
Squash?
Yes. It's not in the rules since they are not fully implemented yet but a number is not determined. For now I view it as the Leader can form a conversation and invite 10 more people which is the max (at least in Smashboards) and that will be the announcment post or wall of expression. We don't know if Splatoon yet can handle 3 vs 4 teams or uneven member teams. I suppose it can but that is speculation. The max in the game is 4 players so Squads can accept more people. I would suggest between 6 and 8 not 10 as 10 and the Captain would be 11 in total. While the Squad is big it will also be harder to allow others in your team to play. 6 is the best with two players as backup for the main team or eight as a practice Squad and a different team for strategic purposes. (Each team may focus on their own startegy). Of course for competitions a Captain (same as in sports games) would want the best of the best so if your Squad is too big it will render some members unhappy as they will see less participation.
I see the reasoning behind this and I certainly agree, but shouldn't bigger Squads be acceptable? I'm sure there will be some people who can't join the Squads they want to join, but they don't want to lead their own, or perhaps they can't do it. What I mean is, surely if there's a big Squad, different members can battle every time they challenge/are challenged by another Squad, just to give everyone a chance. Maybe the Squad can recruit more members but just have a regular team of 4 people that battle in the tournament, with a couple of back-ups, and the other members are just there for the community aspect of it. Assuming there are private lobbies, I'm sure a Squad can just have matches amongst themselves for fun, and some people may want that friendly aspect of a group. I guess I'm thinking more of a Clan than a Squad here. I'm not sure if Clans would ever become a thing on this site, but if they did, I'm sure they could just decide on a small team from their ranks to form the Squad and win for them here.
Squads could just become the equivalent of Clans to be honest. There's a set team from each Squad to represent them, but if someone can't make it, someone else in the Squad can take their place. This idea is actually starting to remind me of raiding guilds in MMOs. There will usually be one or more raid teams with the raid leaders organising everyone. A lot of 'socials' join the guild just to be part of that community, but if there's ever a spot on the raid team because someone can't make it suddenly, one of the social members can ask to join in their stead. They'll usually get checked over to make sure they meet the requirements, and if they do, they're good to go.
However, if that does happen with Squads on this site, then you would obviously only need to include the active battlers in the main post of this tournament thread. Would be silly if multiple Squads grew large and you included every member in the post. :P
Apologies if my post here is a little jumbled, I'm feeling pretty exhausted today. I hope I made sense though!