I think a lot more is being written into this than there really is. When Kovalchuk was signed, there was risk analysis. Don't think for a minute that a contingency plan wasn't discussed if he didn't pan out. GM's aren't stupid, they aren't going to sign a guy to a 35+ contract and not think about consequences if things don't go smoothly.
When they signed him they probably evaluated that risk, and came to a determination. "If we sign him and he can't perform, are we comfortable with the options?" Apparently the answer was yes. I think Blake is doing OK so far, and I'm definitely not a fan of Luc in the front office. That said, I don't buy the narrative that they truly thought this team could contend. That's just crap to sell tickets. If they truly thought that Stevens wouldn't have been hired so quickly and there would have been a longer search for a coach. WD certainly wouldn't have been brought in to turn things around, he's not a good coach.
I think all the options were evaluated before, now they'll work with Kovalchuk to figure out the solution that's best for everyone. GM's don't turn on a guy and hang him out to dry unless he does something really dumb/shitty. By all accounts Kovy bought in, and while management will be disappointed they'll still try and do what's best for him. You never want to burn that bridge with players because it will bite you in the ass with future signings.