Hextall, 50, has been dealt a difficult hand.
Because of several questionable long-term signings, he inherits a team that has $65.5 million committed to next year's cap, which is expected to rise to about $69 million.
That cap figure does not include potential free agents Brayden Schenn, Kimmo Timonen, Adam Hall, Jason Akeson, and Erik Gustafsson.
In other words, Holmgren has left Hextall with little spending flexibility unless he deals a high-priced player or two. The Flyers also have a weak farm system, though they do have several talented young defensemen.
"There's always challenges, whether you have a lot of guys to sign or you're close to the cap or you need to get better," Hextall said. "There's challenges every year. Quite honestly, when you're an ex-player, you love challenges. I look forward to seeing if we can move pieces for a better fit or whatever, and obviously get guys signed to fair deals that will fit under the cap. There's a little bit of manipulation in every area where we've got to look at everything."
Hextall said that he wants the Flyers to go into camp in better shape next season, and that trades aren't always the best way to improve a team.
"Sometimes you've got to look inside and put it on the players. Brayden Schenn, Sean Couturier, Jake Voracek, Wayne Simmonds - [say] you guys have got to find ways to get better," Hextall said, adding that he wants the even-strength play to improve. "I think you've always got to look to get better from within first, and then things you can do on the outside you'll certainly do as well."
Hextall said he liked the "upside of our young forwards. Can we add speed? Yeah, we can add speed. Can we add skill? Yeah, probably. I think our team's skilled enough. I guess the one thing I'll be looking at is the fit with our forwards. Does everything fit together? Do we have the best fit?
"On defense, we've got a couple of guys that are getting older, so we've got to take a peek at that as well. We do have three good, young defensemen coming right now" - Robert Hagg, Shayne Gostisbehere, and Sam Morin - "that we're real excited about. We also can't rush the process with these guys. . . . We can't just throw them in the lineup and expect them to make us a better team. That'll all shake out at training camp and throughout the year, but the one thing I'm not in favor of is rushing young players."
Hextall, the Los Angeles Kings' assistant GM when they won the 2012 Stanley Cup, played 11 years for the Flyers and is the franchise leader in games by a goaltender (498) and wins (240). After his playing days, he spent seven years in the Flyers' front office - three as a scout, four as director of pro player personnel before joining the Kings in 2006.
He returned to the Flyers last year as assistant GM and director of hockey operations.
Holmgren said "not at this point" when asked whether someone would be named to fill Hextall's old roles. He added that Hextall may look into hiring someone.
Hextall said he "wouldn't have taken this job if Paul Holmgren didn't want to move to the position he's moving to. I absolutely wouldn't. I would have refused. You can ask Homer, at one point when we talked about it, he said, 'Stop asking me that. I want to go where I'm going . . . I'm very comfortable.' "
When he returned to the Flyers last year, Hextall said, he did it because of a "gut feeling," and there were "no promises" that he would replace Holmgren at a certain point. "Did I think and hope this could happen at some point? Yes, I did . . . [but] there were no assurances from anybody."
The new GM said the Flyers had preliminary talks with Timonen about returning and were waiting for his response, and he said he was evaluating whether Ray Emery, another potential unrestricted free agent, would be asked to return as the backup goalie.