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

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.