The 28-year-old Bradford City striker was awarded the sum for loss of past and future earnings at a High Court sitting in Newcastle upon Tyne. Watson, formerly with Sheffield Wednesday and Southampton, was playing only his third game for Bradford City in February 1997 when his leg was broken by a two-footed challenge from the Huddersfield Town defender Kevin Gray.
Judge Mr Justice Taylor said there was "every likelihood" that Watson, who had performed at the "very highest level" would have gone on to play in the Premier League again. Since his injury, the hearing heard, the striker has struggled to make the first team at Bradford and is out of contract in the summer.
The award, against Huddersfield, was calculated as pounds 202,643 for the footballer's loss of earnings since the incident, and pounds 730,500 for future earnings if the player had joined a Premiership side. There was also an award of pounds 26,000 to cover the costs of medical treatment and care following the tackle.
Outside the court Watson said: "At the end of the day I go to work. If you get injured at work things like this have to be taken into account and this is what this judgment is about today."
Watson said he had "no feelings" about Kevin Gray, adding, "I just want to get on and do my part in helping Bradford City get into the Premiership."
Marseilles striker Titi Camara is to sign for Liverpool next week. The Merseysiders have agreed a pounds 2.5m fee with the Guinean's club and the 26- year-old will sign after his side's Uefa Cup final against Parma next Wednesday.
Liverpool are also set to move for West Ham's record buy Marc-Vivien Foe. Their manager, Gerard Houllier, knows that the Cameroon international is unsettled in London since a pounds 4m move from Lens.
Houllier is known to be an admirer of the powerful midfielder, although he would have to sell a player to make way for him. Foe is interested in going to Liverpool and his agent has discussed the possibility this week while tying up the Camara deal.
Aston Villa, who reached the Premiership summit last autumn with an all- English side, have offered Everton pounds 5.5m in an attempt to beat Bordeaux to the signature of the 24-year-old midfielder, Olivier Dacourt.
John Gregory, the Villa manager, had a pounds 5m bid for the unsettled Frenchman spurned before the transfer deadline in March. But now that the Everton manager, Walter Smith, has admitted that the pounds 4m ball-winner from Strasbourg may have to be offloaded to help clear an pounds 18m overdraft, Gregory has revived his interest.
Villa are also considering the pounds 2m fee being sought by the Argentinian club, Independiente, for their Colombian international goalkeeper, Farid Mondragon. The 27-year-old played against England in last year's World Cup and has spent three days on trial with Villa, who are resigned to losing Mark Bosnich under the Bosman ruling.
Denis Irwin will definitely miss the FA Cup final after the Football Association confirmed he had no right of appeal against the red card he was shown for two bookable offences against Liverpool on Wednesday.
United felt David Elleray had been harsh to caution the full-back a second time for kicking the ball away, which triggered his dismissal and a one- match ban. However, even if Elleray admits he was wrong, the FA said there can be no reprieve.
Stoke City have given free transfers to seven first-team regulars, including their player of the year, Kevin Keen, and will listen to offers for any other member of the squad.
West Bromwich are to release Mario Bortolazzi 10 months after signing the midfielder from Genoa, though he may play tomorrow at Tranmere.