Of all the bargain signings that Norwich have made over the years, none can surely rival the purchase of 19 year old Liverpool reserve team defender Dave Watson for £50,000 on 29th November 1980. The Norwich fans thought that manager Ken Brown was mad to buy an unproven defender especially as neither he nor his assistant Mel Machin had seen Dave in action. Reliant on the reports of Dave Stringer and Doug Livermore, they took a gamble and awarded Watson his football league debut against Ipswich on Boxing Day 1980. The gamble paid off and Dave made 256 appearances at the heart of the City defence. A club captain, he led them to the Milk Cup victory in 1985 and the Division Two championship in 1986. At the Norwich City Centenary dinner, Dave described winning the Milk Cup as his greatest moment at Carrow Road.

He gained 6 England international caps whilst at Carrow Road, making his debut in a 2-0 victory against Brazil at the Maracana stadium in June 1984. Failure to make the England squad for the Mexican World Cup of 1986 encouraged Dave to respond favorably to offers to perform on a higher stage with a bigger club. He became Norwich's third £1 million departure when he returned to Merseyside to play for Everton for £1.23million in August 1986. In addition to another six international caps, Dave won the League Championship (1986-87) and the FA Cup(1985) as well as a FA Cup runners up medal (1989). Dave was club captain for many years, and took over the caretaker manger's role in March 1997 following the resignation of Joe Royle. He held this post until the end of June 1997 with the appointment of Howard Kendall. At the end of the 1996/97 season, Dave had made 369 league appearances for Everton scoring 23 goals. He was granted a testimonial against Rangers on 16th July 1997 which Everton won 3-2.

The Daily Mirror speculated on 17 December 1997 that Watson might join Manchester City in a part-exchange for Georgi Kinkladze. However Watson's short term future at Goodison Park seemed assured with him signing a new one year contract in March 1998. With Mike Walker's departure from Carrow Road at the end of April 1998, Dave was linked to the Norwich manager's post with Norwich apparently approaching Everton for permission to approach Watson. However the position was eventually given to Bruce Rioch and Bryan Hamilton. Along with Ian Rush and Mark Wright, he has also been linked with the vacant manager's spot at Wigan as its previous incumbent John Deehan quit to team up with Steve Bruce at Sheffield United.

Dave was by now the oldest player in the Premiership but had also moved to fill the first team coach position for Everton. Dave was named by Teamtalk as a potential successor as Norwich City manager following Bruce Rioch's resignation on 13th March 2000. The Sunday Mirror repeated this story on 2nd April 2000. The following year saw The People name Watson on 22nd April 2001 as favourite to manager newly relegated Tranmere Rovers. This speculation was accurate as Watson was appointed the new Tranmere manager on 4th May 2001. His spell as first team coach at Goodison may not prepare him for life in Division Two.

Dave was sacked as Tranmere manager on 2nd August 2002 following their 7-0 pre-season friendly defeat against Birmingham. Chairman Lorraine Rogers complained about the lack of passion and pride on the pitch and announced that the club was up for sale. Dave is now scouting for Birmingham City, managed by former teammates Steve Bruce and Mark Bowen

In September 2004, Liverpool Schools football received a boost when Dave agreed to coach their Under-14 team. "I represented Liverpool boys at primary and secondary school level and I just feel I would like to get involved and develop the youngsters," said Watson. "I feel I have wide experience as a player and a coach to offer the lads something new and I also feel I could put something back in the game at grass roots level." Watson joins a highly successful coaching team that already includes former Tranmere Rovers star Kenny Irons, who has helped guide the last three teams he has been involved with to English School Trophy
semi-finals.

After Steve Bruce moved to Wigan, Watson did some scoutng for him before being appointed as youth team coach on 23rd April 2008, replacing David Lowe. Speaking on his new role, Watson said: "You have to take these opportunities when they come around, and I'm very excited about joining what is clearly a club going places. I think we have a very healthy crop of youngsters here, who have obviously been well coached in the past."

Watson was appointed as Under 18 Coach at Newcastle United on 7th November 2011.