I have no problem with a pay to play policy - $5/table or somesuch seems pretty reasonable to me. Or even $1 a player if there are more than 5 players. Space for gaming costs money, sometimes a lot depending on where you're renting. Busy shopping areas close to the campus are very expensive, particularly when competing against places like the Gap or Starbucks. It's a major reason my FLGS isn't even in the heart of the city close to the college anymore.
The FLGS I go to rented the space next to theirs for a while, even had a doorway put in between the two spaces. But the local players complained when they tried to recoup to pay some of the rent on the expanded area. A relatively short time later, they had to give up the lease on the extra space, the landlord rebuilt the regular wall between the spaces, and a new shop came in. The FLGS simply couldn't take on the extra rent permanently without it generating more income. Mind you, this was when the economy was pretty decent.
A few years later and the store that went into that space is gone again and the landlord is having trouble renting it out. The FLGS is renting it again, I'm sure at a reduced price. I notice they have NOT put in a doorway directly between the spaces again...
They do manage, I think, to make some money by doing weekly sanctioned Magic Booster Drafts. The entry is $16 and you get 3 packs for that. I presume that helps pay the bills, but I haven't seen anything more about general pay to play.