City were banned for two years from the Champions League by UEFA, but the Court of Arbitration for Sport upheld their appeal on Monday.
And Richards thinks Guardiola can build a strong team at the Etihad for years to come.
"It's good news. I don't want to be biased but with Man City they always pleaded their innocence from day one and it's good to see it come to a conclusion after it hanging over them for so long," Richards told the BBC.
"It has made it difficult to plan for the future but, finally, it has come to a conclusion which is good for everyone.
"Two years would have been so damaging. Pep Guardiola's contract is up at the end of next season, Kevin De Bruyne is in the form of his life – the players in that side want to play Champions League football.
"It's good it's over with. From a players' point of view, it's difficult not knowing if you would be in it so to put it to bed is brilliant."