Stay far out of it and stop listening to someone who by your own description, is a shit stirrer.
Seeing as this guy is in a management position, if he truly is a racist, that will reveal itself in time.
But also, because he IS in a position above you and Shit-Stirring Mary, if it comes down to having to eliminate people and he finds out shit like this has been talked about him behind his back, guess who will be shown the door if they have to eliminate a position or two?