Watson was born in Belfast and educated at Rockport School, Northern Ireland. His Formula One career began in 1972 in a non-championship event β the World Championship Victory Race at Brands Hatch β driving a customer March-Cosworth 721 for Goldie Hexagon Racing. His World Championship debut came in 1973, racing in the British Grand Prix in a customer Brabham-Ford BT37 and in the US Grand Prix in a works Brabham BT42. In the British race he ran out of fuel on lap 36; in the United States the engine failed after seven laps.
Watson scored his first World Championship point at the 1974 Monaco Grand Prix driving a customer Brabham BT42-Ford modified by Goldie Hexagon Racing, finishing the season with six points. In 1975, driving for Team Surtees, Team Lotus, and Penske Cars, he failed to score championship points. At the Spanish Grand Prix he was running second behind Mario Andretti until stopping in the pits for vibrations; Andretti later retired and Watson rejoined to finish eighth. In non-championship events he was second in the Race of Champions at Brands Hatch and fourth at the International Trophy at Silverstone.
Watson secured his first World Championship podium with third place at the 1976 French Grand Prix. Later that season he took his first victory driving for Penske in the Austrian Grand Prix, having qualified second. After the race he shaved his beard, the result of a bet with team owner Roger Penske; in a June 2023 interview with the F1Weekly podcast Watson said Penske did not recognise him in the hotel lobby the following morning.
In the third race of the 1977 season, the South African Grand Prix, Watson scored a point and recorded his first fastest lap. Those achievements were overshadowed, however, by the deaths of driver Tom Pryce and a track marshal, Frederik Jansen van Vuuren. Driving a Brabham-Alfa Romeo that proved unreliable throughout the season, Watson nevertheless gained his first pole position at the Monaco Grand Prix and qualified in the top ten no fewer than 14 times. He completed the full race distance in only five of the 17 events. At the French Grand Prix he dominated from the start before a fuel metering problem on the final lap relegated him to second behind eventual winner Mario Andretti.
In 1978 Watson managed a more successful season, out-qualifying and out-racing teammate Niki Lauda on occasion. He managed three podiums and a pole, notching 25 points for the highest championship placing of his career to that point.
For 1979 Watson moved to McLaren. In 1981 he gave McLaren their first victory in over three years at the British Grand Prix, also securing the first win for a carbon fibre composite monocoque Formula One car β the McLaren MP4/1, designed by John Barnard. Later that year at Monza during the Italian Grand Prix, Watson lost the car coming out of the high-speed Lesmo bends and crashed backwards into the barriers; similar accidents had previously proven fatal, but Watson was uninjured, an accident he recalled as looking far worse than it was. After James Hunt's abrupt retirement following the 1979 Monaco Grand Prix, Watson was the only full-time competitive British Formula One driver until the end of his own career.
Watson's most successful year was 1982, when he finished third in the Drivers' Championship, winning two Grands Prix. At the first-ever Detroit Grand Prix he overtook three cars in one lap and charged from 17th on the grid to victory on a tight, twisty street circuit. He went into the final race at Caesars Palace with an outside chance at the title but finished five points adrift of Keke Rosberg and level on points with Didier Pironi.
In 1983 Watson repeated the feat of winning from deep in the grid at the final Formula One race held at Long Beach, starting from 22nd β the farthest back from which a modern Grand Prix driver had come to win. That victory also involved a fight with teammate Lauda, who started 23rd; Watson ultimately finished 27 seconds ahead of him.
At the end of 1983, Watson was dropped by McLaren after negotiations with team boss Ron Dennis broke down when Watson asked for more money than dual world champion Lauda was earning. Dennis instead signed Alain Prost at comparatively little cost. Watson returned for one further race two years later, substituting for an injured Lauda at the 1985 European Grand Prix at Brands Hatch; he qualified 21st and finished seventh, racing under Lauda's number "1." That was only the second occasion since the system of permanent racing numbers was introduced in 1974 that a driver other than the reigning world champion had raced car number 1 in a championship race β the only other instance being Ronnie Peterson in 1974.
In 1984 Watson partnered Stefan Bellof to victory at the Fuji 1000 km during Bellof's championship year. He also drove at the 1984 24 Hours of Le Mans for Bob Tullius' Group 44 Jaguar team in an IMSA-spec Jaguar XJR-5 powered by a 6.0-litre V12, partnering American Tony Adamowicz and Frenchman Claude Ballot-LΓ©na. In what was Jaguar's first appearance at Le Mans since 1959, Watson briefly led the race in the opening hour before the faster Porsche 956s and Lancia LC2s pitted; they failed to finish due to engine trouble and were classified 28th.
In 1987 Watson finished second in the World Sportscar Championship alongside Jan Lammers in the TWR Silk Cut Jaguar XJR-8, winning three championship races at Jarama, Monza, and Fuji. Watson competed at the 24 Hours of Le Mans seven times between 1973 and 1990, with a career-best finish of 11th in his final start in 1990, driving a Porsche 962C for Richard Lloyd Racing alongside Bruno Giacomelli and Allen Berg.
Upon retiring from driving, Watson worked as a television commentator, ran a race school at Silverstone, and managed a racetrack. He was also the first person to test a Jordan Formula One car in 1990. From 1989 to 1996 he worked as a Formula One commentator for Eurosport alongside Andrew Marriott (1989β1990), Richard Nicholls (1990β1992), Allard Kalff (1992β1994), and Ben Edwards (1995β1996). In 1997 he commentated for ESPN. From 1998 to 2001 he was Charlie Cox's sidekick commentating on the British Touring Car Championship for the BBC. During the 2002 Formula One season he co-commentated for Sky Sports' pay-per-view F1+ coverage alongside Ben Edwards; the arrangement was dropped for 2003. From 2005 to 2009 he worked as an expert commentator for BSkyB during their A1 Grand Prix broadcasts. Since 2022 he has served as lead commentator for GT World Challenge Europe and also commentated on the 2022 Miami Grand Prix for F1TV.
In 2016 an academic paper reporting a mathematical modelling study of the relative influence of driver and machine ranked Watson 25th among all-time Formula One drivers.
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