The Essendon star has been linked with a move away from Tullamarine despite being contracted to the club until the end of the 2021 season.
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Speaking on SEN Breakfast, Watson was confident that Merrett would be a Bomber next year.
“I got a call yesterday in the afternoon that concerned me a little bit, but I’ve been assured that he’s not going anywhere, he’ll be staying at Essendon, he does have a contract of course,” he said.
“People read into this, the fact that he got left out of the leadership group and maybe he’s still unhappy there at Essendon, but I was told categorically that he would not be going anywhere.
“There has been some scuttlebutt out there that he might want to go to Melbourne or Melbourne is really interested in him and he’s got a great mate in him in Michael Hibberd and obviously he was coached by Simon Goodwin as well, but that’s not going to be the case as it was put to me yesterday.”
Merrett was one of the Bombers best players in 2020, finishing second to Jordan Ridley in the Crichton Medal voting.