My derby team and I recently had a t-shirt party. We are on a budget right now and couldn't afford new merch so we made our shirts!
All I used to make the stencil was duotang folders and dividers (not the paper type, the thicker plastic type). I got see through ones and simply traced the design onto the plastic and cut with an exact-o knife. Tada! It was very easy to do and the results were great! Very clean lines.
I highly recommend using fabric paint too. Easily purchasable from good ol' Wal-mart. That is what I used and my shirts have held up great after mutiple washes. No peeling or wear at all. I used Fabric puff paint and applied it with a paintbrush.
Another option if you need more bend to the stencil is overhead transparency sheets (if they even call them that anymore, I suppose I am showing my age now). They are cheap and also hold up quite well.
Here is a picture of how the back turned out using the plastic duotang as a stencil...I have somehow misplaced my images of the front logo with the pistols.