Defenseman Bryan Watson, acclaimed the Washington Capitals' most popular player of last season in a fan-club vote, was released by the hockey team today after settlement of his $120,000-a-year contract.

"It's great to be out of the whole thing," said Watson, who had not played since Dec. 23 and had been used sparingly in the six weeks before that. "This has been a very excruciating winter for me. Nothing made sense.

"During the summer, I came in, renegotiated my contract, got a raise and was told I'd be a big part of the team. Then I just sat and watched. The most frustrating thing was seeing the goals-against go up. I like to think if I'd been playing, it wouldn't have been so high."

Although the club indicated that the 36-year-old Watson was a victim of his age and a decision to go with younger players, the decisive factor in Watson's fall from favor probably was the replacement of Tom McVie by Danny Belisle. When McVie was coach, he depended on Watson to stabilize the younger players.Belisle felt the game had passed Watson by.

"I played him," Belisle said, "but guys like (Pete) Scamurra and (Leif) Svensson were playing better and that's where the club's future lies."

Watson has played with six NHL teams in a career that began with Montreal in 1963. A fiery competitor who ranks as the all-time NHL penalty leader with 2,212 minutes served, Watson came to the Capitals from Detroit in November 1976 in a trade for defenseman Greg Joly.

"Leaving Detroit was such a disappointment to me," said Watson, a fan favorite in that city for many years. "But we had a lot of fun here with Tom (McVie) and the team. The hockey situation was still very disappointing, not making the playoffs. The most positive thing was the Washington scene. The city is great."

Although Watson cleared waivers without being claimed, General Manager Max McNab said that, "I think he can help some clubs and I'm confident he'll be able to make a deal for himself." If not, the Capitals will offer him a scouting assignment.

Watson is considered prime coaching material and had McVie remained the Capitals' boss, it is likely that Watson would have become his assistant.