Adam Schefter of ESPN reported the relationship appears beyond the point of repair.
Watson had reportedly been advocating for Chiefs offensive coordinator Eric Bieniemy dating back to October as the replacement for Bill O'Brien. The Texans are expected to interview Bieniemy a second time in their coaching search despite his absence from their original list of candidates, per Schefter.
Watson has become disenchanted with the Texans organization after repeatedly being left out of major decisions. His issues with the team began last offseason when Houston traded star wideout DeAndre Hopkins for a dreadful return and reached a fever pitch after his suggestions for the team's new general manager were ignored.
"It's no secret he's disappointed in the [lack of] communication during the hiring process," owner Cal McNair said, per the Houston Chronicle's John McClain.
Bieniemy is one of the NFL's most highly regarded assistant coaches and is viewed as instrumental in Patrick Mahomes' development into the league's best player. While he has surprisingly been passed up for several coaching vacancies the last two offseasons, it does not seem likely that Bieniemy would take the Houston job without assurances Watson wants to stick around.
Because of a confluence of errors Bill O'Brien made, the Texans are without first- and second-round picks, are above the salary cap and lack any high-end skill-position players around Watson. Trading their star quarterback may be the only way to get out from under this mess.