Sergio Perez’s standing in Formula 1 took a significant downturn in 2024, primarily due to a stark performance gap compared to his teammate, Max Verstappen. This shortfall had a tangible impact, contributing to Red Bull’s slide in the Constructors’ Championship standings. Now, the Mexican driver is facing another blow—a financial one—thanks to a clause in his recent contract that forces him to adjust his budget.

When Red Bull decided to extend Perez’s contract mid-season in 2024, many were surprised. His performance had reached a point where dismissal seemed more fitting, yet the team chose to show faith. However, they included specific stipulations in the deal.

One clause stipulated a salary cut from Perez’s $14 million if he finished the season 150 or more points behind Verstappen. Perez had over a dozen races to close that gap when the deal was signed, but with just three races left and a 242-point deficit, the gap is insurmountable. To close it within the required 150 points, Perez would need to outscore Verstappen by 92 points over the next three races, a feat that is impossible given the maximum 86 points available.

Veteran photojournalist Kym Illman, among other sources, confirmed the existence of this clause, noting in a recent video, “These clauses are designed to keep drivers motivated and focused. When large sums of money are involved, teams need assurance that their drivers stay sharp,” said the Australian.

The outcome is clear: Perez will not meet the requirement and will have to accept a pay reduction. Red Bull is unlikely to feel conflicted about enforcing this measure, given the performance setbacks Perez’s season has caused.

Rumors of a potential firing have swirled, but Perez has repeatedly stated that he will be racing in 2025. While his on-track results might cast doubt on this confidence, Perez has off-track strengths that play heavily in his favor. He remains immensely popular in Mexico and secures millions in sponsorships for Red Bull, largely through companies associated with billionaire Carlos Slim. Additionally, a report from Marca indicated that Perez has gained another major personal sponsor, willing to contribute $40 million annually to Red Bull—an amount that is hard for any team to decline.

Given these financial advantages, Perez’s relaxed stance makes sense. Despite the looming pay cut, he is likely to maintain his spot alongside Verstappen in the 2025 season.