In a large skillet set over medium-high heat, add sausage. Using a wooden spoon, break into pieces and cook until browned, about 12 minutes. Using a slotted spoon, remove sausage from skillet and transfer to a paper towel-lined plate.
Then to the skillet, add 2 tablespoons butter and sliced onions and cook until mahogany brown color, stirring often to prevent onions from burning or scorching, 20 to 30 minutes.
To the caramelized onions, add minced garlic and ½ teaspoon optional red pepper flakes and cook until fragrant. Add ½ cup sherry and bring mixture to boil. Note: Use a wooden spoon to scrape the browned bits off bottom of skillet.
Once sherry has reduced and almost evaporated, return the sausage to the skillet and add 1 cup chicken broth, chopped tomatoes, reserved tomato juice and 1 tablespoon thyme. Bring the mixture to a boil and lower the heat to a simmer. Cook until slightly thickened, about 20 minutes.