Arena MOSTLY, strips you of your equipment/runes/Lee Paths/summon bonus that pump you up. But things that have been added since early in the game (Treasure tools, Myoboku, Assist links, Five Nature Chakra, Ninja Assist, Secret Scroll) will all be added to your team's stats. So, older and $$$ players will still have an advantage. Those players that have maxed out those new things are going to do just what you saw, take ~50% damage from you, but completely wipe you out in 1 attack. The star level of the ninja is not going to impact the damage done hardly at all. <100k power star level is a big deal, after that....not so much.