"Right next to my ball was a burrowing animal hole and my club was going to hit it at impact," Watson said. "It was big hole and the club would get caught on it. So, I got a free drop and could easily wedge it out."
He hit a 150-yard shot to the fairway, followed with a wedge to the fringe and two-putted for par on the way to a 3-under 68 and a two-stroke lead. Without the free drop, he thought he could have played a shorter shot.
"I was looking at a 20- or 30-yard shot," Watson said.
Mickelson made a double bogey on the par-3 No. 16, the 20,000-seat stadium hole where he "lost focus" thinking about throwing footballs into the crowd.
The defending champion half-shanked his tee shot left on the 128-yard hole. He followed with a weak flop shot into the bunker, blasted to 8 feet and two-putted.
On the positive side, the former Arizona State player threw some nice spirals and showed no signs of the back pain that forced him to withdraw last week at Torrey Pines.
"My brother, who is the ASU golf coach, brought out some ASU footballs that I signed and threw out there," Mickelson said. "I think it's the last time I'm going to do that, because mentally I was thinking about throwing it a couple holes prior."
He finished with a 72 to drop to 3 under.
Watson was at 15-under 198.
Kevin Stadler was two shots back after shooting a 67.
Dubai Desert Classic
Rory McIlroy hit a wedge into 5 feet for birdie on the 18th hole for a 2-under 70 to regain the outright lead in the Dubai (United Arab Emirates) Desert Classic.
The chief challenge for McIlroy came from an American but it wasn't Tiger Woods. Brooks Koepka, who shot a 65 that left him one shot back. Woods, meanwhile, hit only four fairways and had to rely on some key putts to salvage a 73. He was in a tie for 44th, eight shots out of the lead.