Your analysis is completely devoid of context, such as how they arrived at their current roster or realistic alternatives along that path. Utah is far from guilty of "HORRIBLE spending," as you put it. This is a prime example of why you can't judge how well a team is managed simply by looking at a list of a team's salaries.
First of all, you have to consider the market in question. Superstar free agents aren't coming to Utah, and other highly desired players won't either unless the Jazz severely overpay. Therefore, having a ton of cap space doesn't mean nearly as much for Utah as it would Miami or New York. For example, having Marvin Williams' $7.5 million player option for next season doesn't alter Utah's chance of landing Dwight Howard and Chris Paul next summer, since it would be 0% regardless.
With that in mind, in the summer of 2010 the Jazz were a playoff team with a key player--Carlos Boozer--entering free agency. As expected, the Jazz wisely let Boozer walk instead of re-signing him to a deal along the lines of the 5-year, $75 million contract he received from Chicago. To be more precise, Utah actually engineered a sign-and-trade with Chicago to generate an enormous trade exception, which was significant since the Jazz were still over the cap even after letting Boozer go. Thus, the huge trade exception allowed Utah the flexibility that they would not have otherwise had to add a replacement player.
So instead of keeping Boozer at price tag in excess of 5 years, $75 million (he'd presumably want more to stay in Utah), the Jazz turned him into a trade exception that they used to acquire the younger, cheaper, and more versatile Al Jefferson (3 years, $42 million remaining at the time), which only cost them two lottery-protected picks and Kosta Koufos. Utah was fortunate that Minnesota happened to have two incompatible players in Jefferson and Love and was therefore willing to dump the older and more expensive Jefferson (Love was still on his rookie contract) to create cap space for role players that would better complement Love.
I ask you, what would you have done instead of the Jefferson deal? You're not getting a better player than Jefferson from a salary dump or from the alternative cap space in future seasons, and not finding a comparable immediate replacement for Boozer would have left a returning playoff team with a huge hole. Plugging Jefferson in for Boozer on a Deron Williams-led team coming off a #5 seed made perfect sense. The only alternative would be to completely blow up a solid playoff team featuring Williams in his prime, at a point in which they did not yet believe Williams was a goner.
The following 2010-11 season, as it became clear to the Jazz that Deron Williams was likely to bolt as a free agent in the summer of 2012, they decided to make a deal that would allow them to rebuild on the fly. They received Favors, the Nets' unprotected 2011 lottery pick (which turned into the #3 overall pick, used on Kanter), a protected first round pick originating from Golden State (a lottery pick for which the Warriors delayed conveyance for at least another year via one of the most blatant tank jobs in NBA history), and Devin Harris. At the time, Harris had been the Nets' starting PG for a few seasons and was very productive in that time, establishing himself as a quality starter. There was a huge chasm in salary between the two key players involved--Williams and Favors--so the Nets had to throw in an additional piece to make the salaries match, and the Jazz also needed a replacement for Williams at PG, so the serviceable Harris made a lot of sense.
The turmoil of that 2010-11 season, including the resignation of Jerry Sloan and the trade of Williams, led to Utah falling out of the playoff race that year (they were 31-23 when Sloan resigned, and 8-20 afterward). However, they were able to undergo a respectable rebuild (assembling a young core in Favors, Kanter, Hayward, and Burks) while becoming competitive once again, earning a playoff spot in 2011-12. Rebuilding without going through the painful process of completely bottoming out for multiple seasons is extremely difficult--especially for a small market team--yet Kevin O'Connor has pulled it off twice: after the Stockton-Malone and the Williams-Boozer eras.
In December 2011, the Jazz traded Mehmet Okur to the Nets for a second round pick (the frontcourt logjam in Utah as well as Okur's health made him expendable) and acquired a trade exception as a result. More on that trade exception in a moment.
For whatever reason, Devin Harris in Utah didn't work out well, which triggered a couple of deals. First, the Jazz used their aforementioned trade exception from the Okur deal to acquire Mo Williams, whom the Clippers were willing to dump due to their glut of undersized guards. Utah didn't have cap room to make a significant acquisition, Williams has an expiring contract (so he's not tying up cap space long-term), and he filled a need for Utah (perimeter shooting).
That made it easier for Utah to trade Harris a few days later. They traded Harris and his expiring $8.5 million to Atlanta for Marvin Williams and his remaining two years, $15.8 million. This is the one move for which I think you can blast O'Connor because Williams didn't address a need and adds $7.5 million to Utah's payroll next season, whereas Harris would have come off Utah's books after this season. However, it's nowhere near catastrophic, as the Jazz still only have less than $26 million committed next season (that includes Favors, Kanter, Burks, and Hayward). Millsap, Jefferson, and Mo Williams will be free agents, but assuming they only re-sign one member of the Millsap/Jefferson tandem (since they still have Favors and Kanter), they'll have a lot of cap room available to add some quality role players (for whom they'll likely have to overpay, because NBA players don't want to live in Utah).
As for Millsap, he's a good value at $8 million a year. He's in the final year of a 4-year, $32 million contract, and over the life of that contract he's averaging an efficient 14.9 PPG and 7.7 RPG in 31.3 MPG with a lofty 19.4 PER (including a career-high 21.8 PER last season) while flashing the ability to play SF on occasion. If Millsap were making $10+ million per year, there might be an argument for him being overpaid; if he were making $6 million or less per year, he'd be an absolute bargain. There aren't very many players in the league worth $8 million per year: most are worth a lot more or a lot less, but Millsap is one of the few who actually deserves to be in that range.
To recap, the Jazz have a young core of players with a lot of potential (especially Favors and Kanter) and will have significant cap space this summer, and they got to that point while remaining competitive. They have some guys on the roster whose salaries are a bit higher than they deserve, but it hasn't been a detriment as they've acquired quality players while maintaining long-term financial flexibility. Thus, I don't really understand your criticism of Utah's spending.
