Negotiations between the Avalanche and left wing Ryan O’Reilly toward a long-term contract appear at a standstill, so they are headed to arbitration July 23, an NHL source said Thursday.

The Avs and O’Reilly still could avoid arbitration by agreeing to a deal before then, but such a prospect appears unlikely. They haven’t had any substantive contract talks since the team filed for arbitration last month.

What it means is this: O’Reilly will have his next contract’s terms dictated by an arbitrator, who will present the 23-year-old forward with the choice of a one- or two-year binding contract, and O’Reilly will have to decide which one to take.

An arbitrator can’t award O’Reilly less than 85 percent of his base salary of $6.5 million last season. That guarantees him at least $5.525 million in salary with the Avs for the 2014-15 season.

O’Reilly’s salary cap hit the past two seasons was $5 million. The difference between that number and his last base salary is the crux of the difference between the Avs and O’Reilly’s representatives at Newport Sports, a high-powered agency based in Ontario. The arbitration hearing is expected to be in Toronto. The arbitrator must make a decision no more than 48 hours after the hearing ends.

When the Avs filed for arbitration with O’Reilly, they did it because the team would have had to give him a qualifying offer of his last base salary — $6.5 million — to retain his rights because he is a restricted free agent.

O’Reilly could have pocketed that, or even declined it and held out for more — and he has held out from the team once before, which led to him receiving a two-year, $10 million offer sheet from the Calgary Flames in 2013.

By taking him to arbitration, the Avs probably will pay him less than $6.5 million and are ensured O’Reilly will have to sign a contract to play for them in the coming season or two. The downside could be that O’Reilly might have no interest in signing a long-term deal with the Avs now and might play out his time with them before becoming an unrestricted free agent in two years, or being traded before then.

O’Reilly led the Avalanche in goals last season (28) and the NHL in takeaways (82) — numbers his primary agent, Pat Morris, is sure to bring up during the arbitration hearing. Morris didn’t return a call for comment Thursday.

The Avs likely will counter that by pointing out O’Reilly already is guaranteed to make more in salary than players of similar age and statistics — such as Jamie Benn, a 24-year-old left wing with Dallas. He scored 34 goals for the Stars, played on the Canadian Olympic team and is making $5.25 million each year for the next three seasons.

Adrian Dater: adater@denverpost.com or twitter.com/adater