Reports from the Catalan press this week have suggested Barcelona are hopeful of completing a deal for the 19-year-old this week, with the club's general manager Pep Segura claiming on Wednesday they are "close" to signing both him and Liverpool star Philippe Coutinho.
Watzke admitted the club's demands have increased due to Neymar's departure and also blamed Barcelona for Dembele going AWOL the day after they made their opening offer.
"He'd need to apologise in front of the whole club", he said when asked if there was any way back for Dembele.
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Given the situation, Dortmund will likely reluctantly allow Dembele to leave for Barca as his continued presence at Signal Iduna Park will only be unsettling to his teammates.
Dembele, for his part, is keen on moving to the Camp Nou but he is just one year into his contract at Dortmund and the Bundesliga giants hold all the cards.
"Ousmane is a good lad and a good player". We're not budging on what we've asked for, not a penny.
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Liverpool's owners, meanwhile, released a statement on Friday insisting they will not consider any offers for Coutinho, an announcement that was swiftly followed by reports the Brazil global had submitted a transfer request.
"If a player can say "as another team wants me I won't train any more", that is awful for football". If it is fulfilled, Dembélé will be transferred this summer.
Watzke added in his Sky Germany interview: "You have to talk about the role of the glorious club FC Barcelona".
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When pushed on the percentage likelihood of Dembele leaving for Barcelona, Watzke said: "I see the transfer probability of Ousmane Dembele under 50 percent".