Richardson and his partner, former Barcelona player Maxi Lopez, had been in talks with the current owners of the Sky Bet Championship club for five months.
But after extensive due diligence Richardson said it was not possible to continue.
"The club means a lot to me and I am gutted that we have not been able to complete the deal," he told Birmingham Live.
"I feel for the loyal staff and loyal supporters as I have been a Blues fan since I was a young lad."
Maxco Capital, the company backing the duo, issued a statement saying it had been left with "no alternative".
"Following several months of due diligence at BCFC Maxco has decided not to proceed with the purchase of the shareholding and stadium of BCFC at this time," said the statement, published by the Birmingham Mail.
"In light of our due diligence we attempted to renegotiate the terms of the original agreement to reflect our understanding of the current business status, but could not agree revised terms with the current owners.
"We have been left with no alternative and are bitterly disappointed as we know what this club means to the community and the very loyal fanbase.
"We really hope that BCFC finds an owner who is as passionate about this club as we are."