Richards, 86, informed the AFL through his family that he did not wish to receive such an award after he was ineligible to be granted Legend status among this year's Australian Football Hall of Fame inductees.
In a statement, the AFL and the AFL Commission said it wished to apologise if any offence had been caused to Richards and his family.
The AFL proposed to present the special award at the Hall of Fame dinner in Melbourne on Thursday night.
AFL chief executive Andrew Demetriou said Richards had been a "giant" and the "largest media figure in the history of the game" for more than 50 years.
"He was made an AFL life member in 1987 for his work in both the print media and his contribution as a television and radio broadcaster, and he has continued to be a great promoter and lover of our game throughout his life across more than five decades after his playing career concluded," he said.
"The Hall of Fame criteria for Legend Status is extremely strict, based only around playing and/or coaching record, but the AFL wishes to state for the record that the contribution of Lou Richards to the media coverage and promotion of our game over the last 50 years is matched by few people in the history of our sport."
The issue came to a head after a recent media-driven campaign pushed for Richards' inclusion in the Hall of Fame with Legend status.
The AFL Commission proposed that the selection criteria be changed so that Richards could be named as a Legend, but the Hall of Fame Selection Committee did not support the proposal. The AFL Commission then accepted that view.
The 1953 Collingwood premiership captain was an inaugural Hall of Fame inductee in 1996, but did not meet the criteria for being named a Legend:
"The classification of 'Legend' will be applied to honour those players and coaches who have had the most significant impact on the game of Australian Football and caused the game to change significantly for the better. Legends should be players and coaches who immediately come to mind when players and coaches at the very pinnacle are discussed."
Richards had an outstanding football career with Collingwood – he played 250 matches from 1941-55 and captained the Magpies from 1952-55 – but his profile grew even bigger through his subsequent involvement in the media with the Sun News-Pictorial newspaper, Channel 7 and then Channel 9.
