An NHL source told Newsday yesterday that if an agreement with

Nassau County officials for a new arena to replace Nassau Coliseum is

not in place by July 1, the Islanders plan to cut payroll drastically

and probably will start by trading Trevor Linden, Bryan Smolinski and

Rich Pilon.

A league source said co-owner Steven Gluckstern told commissioner

Gary Bettman the team lost $20 million this season and cannot afford to

do so again. Bettman has represented the Islanders in arena negotiations

with county officials. The talks were suspended on Jan. 29, nine days

after Nassau County Executive Thomas Gulotta reported there had been

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"tremendous progress" toward a deal.

Sources say the talks were halted for two reasons: Islanders

co-owner Howard Milstein's failed attempt to purchase the NFL's

Washington Redskins and Bettman's attempt to broker the sale of the

Islanders to a group headed by former Madison Square Garden president


Bob Gutkowski.

Gutkowski told Newsday he no longer is involved with SFX

Entertainment, which owns the Westbury Music Fair and is interested in

buying the team. Gutkowski refused to divulge whom he now represents but

said, "I'm still very interested in pursuing the Islanders." Club

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officials were coy about whether the team is for sale but said

Gluckstern urged Bettman to rekindle arena talks with county negotiator

Mort Certilman.

Certilman has said he is waiting for the club's ownership situation

to be clarified. Certilman and Gluckstern did not return calls

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One NHL team had a budget of less than $20 million last season -

the expansion Nashville Predators at $13.7 million. The Islanders

finished their fifth straight season out of the playoffs with a $24.6

million payroll.

A published report said Gluckstern told Bettman he would reduce the

payroll to $12 million if he does not get an arena deal. A Gulotta

spokesman said, "The county has not been made aware of any such

discussions." An NHL source said Gluckstern did not specify $12 million

as a projected budget but the source said without an arena deal the team

will be forced to trade Linden (who earned $2.5 million this season) and

Pilon ($1.5 million) and could not re-sign restricted free agent

Smolinski ($1.75 million).

A spokesperson for Bettman characterized the published report as

"not accurate."

The Islanders do not plan to offer contracts to unrestricted free

agents Craig Janney ($1.7 million), Joe Sacco ($700,000) and Mike Hough

($700,000) but raises would have to be factored in for restricted free

agents Felix Potvin, Mariusz Czerkawski, Wade Flaherty, Mats Lindgren,

Barry Richter, Vladimir Chebaturkin, David Harlock and Steve Webb.

Zigmund Palffy, due to make $5 million next season, is expected to

survive any payroll trimming.

"Looks like I'm going to play in Florida with Pavel [Bure],"

said Gino Odjick, scheduled to make $800,000. Pilon said, "The owners

either will pay us or get rid of us. Until they get a new arena, they'll

probably keep the payroll down."

Mark Lawrence, who is to become an unrestricted free agent July 1,

said GM Mike Milbury gave his agent, Pat Morris, permission to talk to

other teams while reserving the right to make an offer.