Even at the age of 37, Watson was a regular in the Everton side as captain, playing 22 times in the 1998–99 season though by 1999–2000 it was obvious that he was nearing the end of his playing career as he played just seven times all season, before calling time on 15 years at Everton and becoming manager of Tranmere Rovers on 4 May 2001. His final game for Everton was a 2–2 draw with Tottenham Hotspur on 15 January 2000.