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The ansible-operator binary will reject the kubeconfig if the server URL contains a path.
There is currently no workaround other than running the operator as a pod in the cluster (where it will use the internal endpoint). The fix for this issue is currently blocked waiting on a fix to the apimachinery package. Once the upstream issue is merged then a proper fix will be done for ansible-operator. Work on this issue is being tracked here: https://github.com/operator-framework/operator-sdk/issues/4925
See #4987 for more details.
Last modified June 17, 2021: Release (#4994) (205e0a0c)