That makes no sense. If anything it's a message for his team. He's not going to lose respect from his players for getting rid of an unnecessary distraction, who is pretty much at the end of his career.
The message could be received either way. Players can either view it as Philbin having a no tolerance policy and entirely keeping the focus on football or they can see it as Philbin washing his hands of players and not standing by them as soon as bad news breaks without letting the legal process being played out.
If you ever played a team sport then you would know that you and your teammates share a tight bond and hearing your coach cut a player abruptly might have a mixed response. If Chad had a morals clause in his contract then I understand Philbin's decision, but if that isn't the case at least let the legal process play out before taking action.
I understand your stance that Philbin is trying to create the best and most distraction-free environment for his players, but don't rule out some players taking it a certain way.