It is the largest buyout in NHL history, according to capgeek.com, a site that tracks NHL salaries.
With the buyout, the Flyers will have nearly $4.2 million in cap space. They will have about $9.1 million when Chris Pronger goes on the long-term injured list at the start of the season.
The decision was made "strictly for cap flexibility," said Peter Luukko, president of the Flyers' parent company, Comcast-Spectacor.
"This has nothing to do with anything on ice or off the ice," Holmgren said. "It's a business decision we've got to make."
That said, Bryzgalov had become a locker-room distraction with his odd comments, and he had a sometimes-contentious relationship with coach Peter Laviolette, sources said. (As for reports of him sleeping during a team meeting this year, that did not happen, said multiple sources.)
Luukko said Holmgren met with him and club chairman Ed Snider after the season and the GM said buying out Bryzgalov would give the Flyers "the most flexibility to make our roster better."
The list of unrestricted free agents who interest the Flyers includes wingers Viktor Stalberg, Nathan Horton, Bryan Bickell, and David Clarkson. In addition, the team is expected to re-sign winger Simon Gagne.
The free-agent list could also include quality players who are bought out of their contracts. Teams must make decisions on buyouts by July 4. The free-agency period begins July 5.
During a conference call with some reporters Tuesday, Bryzgalov, 33, oozed sarcasm when told the buyout decision had been made public, "Congratulations to you guys," he said.
In his two years with the Flyers, Bryzgalov was 52-33-10 with a 2.61 goals-against average and .905 save percentage. His playoff numbers with the Flyers: a 5-6 record, 3.46 GAA, and .887 save percentage.
Sources say Bryzgalov - whose No. 1 spot is expected to be taken by Steve Mason - and Laviolette had some verbal spats during the season.
Laviolette did not return phone messages.
Asked to comment on the buyout, Bryzgalov said: "I don't want to talk to you guys." He then hung up the phone.
Bryzgalov had an up-and-down two seasons after signing a nine-year deal with the Flyers.
Early in his first year, he said he was "lost in the woods" and that he had to "find peace in my soul to play in this city."
In short, he never seemed comfortable under the microscope in a big market such as Philadelphia.
He did play remarkably well late in his first season with the Flyers, putting together the NHL's second-longest scoreless streak (249 minutes, 43 seconds) since expansion in 1967-68.
But that season ended with a blooper of a goal that sealed the Flyers' playoff fate against New Jersey, and this year (2.79 GAA, .900 save percentage) he never got into a rhythm.
After Bryzgalov's first season, Holmgren made it clear he wanted the goalie to focus more on hockey and less on some of his bizarre comments.
"His job is to stop pucks and help us win games," Holmgren said at the time in a good-natured tone. "It's not Comedy Central."
But Bryzgalov appeared to be imploring the Flyers to use a compliance buyout on him by continuing to be a distraction. In an interview with the Russian sports website Championat, he was quoted as saying he disliked the city of Philadelphia and that he admired murderous dictator Joseph Stalin.
It is not known whether those comments were lost in translation into English.
"He's said some off-the-wall things," Luukko said, "but this was strictly a business decision. Claude Giroux's [contract extension] is coming up and we want to be able to look at players in free agency and in the trade market."
Asked if Bryzgalov had become a distraction in the locker room, Flyers forward Brayden Schenn said, "I don't know. Everyone knows Bryz is Bryz. Some people may think he's a little different, but I'm not going to say one way or another. I'm sure you guys [reporters] know how Bryz was."
The Flyers last week announced they were buying out Danny Briere's contract; they thus have used both compliance buyouts that were created by the new collective bargaining agreement.
The buyouts will save the Flyers about $12.2 million in cap space during each of the next two seasons.
Contact Sam Carchidi at email@example.com. Follow on Twitter @BroadStBull.