OAKLAND, Calif. - The Golden State Warriors exercised the option Tuesday to keep coach Don Nelson under contract for the 2008-09 season.

Golden State Warriors' coach Don Nelson argues a call with referee Eric Lewis late in the second half of an NBA basketball game against the Charlotte Bobcats in this March 5, 2008 file photo in Charlotte, N.C. The Warriors exercised the option Tuesday, March 11, 2008 to keep Nelson under contract for the 2008-09 season. (AP Photo/Rick Havner)

The two sides reworked Nelson's deal last September, giving the coach a raise in exchange for turning the third year of his contract into a team option.

The Warriors (39-23) put together one of their best season on years, and the team decided to guarantee Nelson a reported $5.1 million for next season. Golden State began the day in eighth place in the difficult Western Conference, 2 1/2 games ahead of Denver for the final playoff spot.

"We're extremely pleased with the job that Don has done this season," team president Robert Rowell said. "He's done a terrific job of building on last year's success and certainly has our team in position to challenge for another exciting postseason journey."

The 67-year-old Nelson is the second-winningest coach in NBA history with 1,271 wins, trailing only Lenny Wilkens (1,332) on the all-time list.

During his second stint with Golden State, he has guided the Warriors to a combined 81-63 regular season record. He helped the team end a 12-season playoff drought last year when the Warriors became the first No. 8 seed to beat a No. 1 seed in a best-of-seven series.

After the upset against Dallas, Golden State lost a five-game series in the second round to Utah.