I have the same problem, with the same game version/build number/platform/OS as the original poster.
My uploaded screenshot, from a clean offline startup of AoM Retold without any internet connection, shows the error and an error message.
A text-based version of the error message is as follows:
"Arena of the Gods
Initialization Failed
0001-0001-fffffffe"
The Arena of the Gods icon is greyed out and says “Arena of the Gods is currently not available”. Multiplayer is also greyed out, and Campaign and Skirmish are both accessible, as all three ought to be, so this is an issue purely with Arena of the Gods.
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After reading about other people with the same issue, my suspicion is that the game is erroneously treating Arena of the Gods as a co-op lobby/game even when playing single-player mode. It also functions like a multiplayer game in other ways; e.g. cheat codes are completely disabled and saving the game is not possible, unlike skirmish mode where both are allowed.
If it were up to me, I’d make the main Arena of the Gods button access the single-player version of AotG, while co-op AotG would be accessed through either the current Multiplayer button or a dedicated co-op button.
Game Version: Version 100.17.51177.0
Build Number: 509929R
Platform: Steam
Operating System: Windows 10
The glitch was not resolved in the new update, and continues to break single-player Arena of the Gods.
Game Version: Version 100.17.64528.0
Build Number: 523280R
Platform: Steam
Operating System: Windows 10
The glitch continues to persist in the latest update. Same error message, same bug.
Another patch, still no change, still the same “Arena of the Gods Initialization Failed 0001-0001-fffffffe” error message when attempting an offline boot. I didn’t expect a fix this time because the latest patch was a hotfix to resolve a different critical bug, but it’s still important to mark it down as a continuing problem, just in case.
Game Version: Version 100.18.419.0
Build Number: 524707R
Platform: Steam
Operating System: Windows 10
Hi @SlimyGreenSlime, thank you for the report. This is a known issue and is already being tracked 
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The latest update said it improved Arena of the Gods’ stability, but it had no impact on this issue. It still kicks you from the game when it shouldn’t if the internet goes down for a few seconds, and it still displays “Arena of the Gods Initialization Failed 0001-0001-fffffffe” on an Offline Mode boot.
Game Version: Version 100.18.12962.0
Build Number: 537250R
Platform: Steam
Operating System: Windows 10
This critical bug is still unfixed with the release of Heavenly Spear and the new Gauntlet mode, almost a year after it was first reported. The only change is that there is an erroneous “You are now online” message after an offline startup but before the AotG error message.
To make matters worse, an internet disconnect of even a few seconds not only kicks you out of your match, but counts as a Gauntlet Mode loss and takes away one of your three lives when it shouldn’t. Gauntlet is completely unplayable with my area’s internet with this instant loss glitch.
Game Version: Version 100.18.49472.0
Build Number: 537760R
Platform: Steam
Operating System: Linux Mint [Proton Hotfix]