We can't fight Murga!
Here are the quest entries in chronological order (reverse from how it shows in the game):
1. We have commenced a blindfolded arena fight.
2. We won the blindfolded arena fight.
3. We convinced Murga to fight against us.
4. We need to impress in the arena before we can get a chance at the championship
The Raucuous one says Murga "already has a challenge underway", and that we might join the other contender ... but who is that?