The Chilean enjoyed a superb debut campaign as manager at the Etihad Stadium - leading City to a Premier League and League Cup double.
However, the former Real Madrid boss has suffered from the dreaded "second-season syndrome" with City eliminated from the UEFA Champions League, FA Cup and League Cup.
And a 2-1 defeat at Crystal Palace on Monday left them with an uphill task to defend their Premier League title, sitting nine points adrift of leaders Chelsea having played a game more.
Vassell, who spent four years at City between 2005 and 2009, believes Pellegrini has earned the chance for another crack at success, but says the large sums of money spent on the first-team squad means that his position is in jeopardy.
"I would like to think he will [still be there next season]," Vassell told Perform.
"But it tends to not work out that way. Managers are dismissed or let go too easily.
"Given the expenditure of teams as big as Manchester City you can see why owners want to get it right as soon as possible and get a return from their investment."
City's setback at Palace means they have now lost six times this season - as many as in the entire 2013-14 campaign.
Vassell, a former England international, feels that part of the champions' problems lay in the fact that City have struggled to maintain a settled team.
"I think personally it's down to the kind of attitude in the league with regards to foreign managers and changing the team around," he added.
"I think it's difficult if you're a top player when one minute you're in the team and the next minute you're out. You don't know if you're coming or going and it's difficult to settle as a team.
"I think with Manchester City some of their main players have had niggling injuries which hasn't allowed them to have continuity in the side.
"And the bunch of players they have there now, as good as they are, I feel around the corner there will be another overhaul and another change there which again is unsettling for players and can affect their performances."
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