Watson, who coached the All Blacks in 1979-1980 and had a long involvement with Otago rugby and the Zingari-Richmond club, died in March.
Zingari president Murray Collie said Watson was a central figure in the club and it was nice to be able to honour his contribution to the sport with a trophy in his name.
"Eric had a lifetime association with the club," Collie said.
"Apart from playing for the club, he also coached through to premier level and I believe he coached one of the teams through to a championship [in 1959]."
Watson moved on to coach Otago and the All Blacks and famously led the Junior All Blacks to a victory against the All Blacks in 1973.
When he had finished coaching at the top level, he returned to his roots at Zingari and was "a very loyal supporter of the premier team and all the teams in the club".
"Very rarely would he miss a Saturday. And he would always come into the club in the evening and he was just a central figure within our club.
"He was always happy to offer advice to the players and to young, aspiring coaches. And, as such, he was just a fantastic person to have around our club."
Collie said the club felt its long association with Southern made it the perfect club to play for the trophy.
Zingari is out of contention in the premier grade this season but Collie felt the side had been better than its record of two wins from 11 games suggests.
The team was hammered 137-0 by University last season but two weeks ago upset the students 27-24.
"I’d like to think that was a one-off. To turn it around this year was fantastic. I know the boys felt as if they owed the club a wee bit of redemption there."
The top four looks pretty well set with four rounds remaining.
Southern leads the competition with 50 points and can start planning its playoff campaign. Harbour (45 points) has hit a good patch in recent weeks and a win against Taieri at Peter Johnstone Park tomorrow will virtually confirm a spot in the semifinals.
Kaikorai (42 points) made a slow start to its campaign but has been the form team. It has not lost since round six and it would be hard to imagine the team tripping up from here.
If there is a crack in the top four, then it might be Dunedin (43 points) which slips into it.
The Sharks have dipped in recent weeks. They were crushed 32-0 by Harbour and lost to Taieri 21-15 last weekend.
Their match against Alhambra-Union (30 points) at the North Ground tomorrow is crucial. A win will get Dunedin to safe ground, while a loss will effectively eliminate Alhambra and confirm the top four.
University (26 points) could lift its total to 46 points if it picks up maximum points from its remaining games. That might be enough to squeeze it into the top four if other results fall University’s way.