In a press conference on Monday, Nolan confirmed that has agreed to a three year deal with the team.
"I'm really excited about going the next step forward and helping shape this team in to a very competitive team, and a team that one day will hopefully battle for a championship," Nolan said.
"If I could pick a place to go, this would definitely be the place, and I'm excited about being here. If there's a city that deserves a championship this is the one."
Sabres General Manager Tim Murray said that he's liked what he's seen out of Nolan, even in a losing situation. "Every day has been a trying situation," Murray said. "There's been very few games where we haven't been competitive."
"He's been in a lot of situations here that haven't been great," Murray said. "A lot of nights I've liked the way our team competed. We have to get him better players. Some games that we hang on and get a shootout loss or something like that I think with better players and the way he coaches we'll get a better result. In trying times I've liked a lot of what I've seen."
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The extension does not come as a surprise. General manager Tim Murray indicated on several occasions that the two sides were close to completing a deal.
Nolan returned for a second stint in Buffalo in mid-November, when he was hired on an interim basis. He took over for, who was fired along with GM Darcy Regier, after Buffalo got off to a franchise-worst 4-15-1 start.