Basically the crest gets taken off the jersey and the top blue layer is removed. Then I'll put a piece of tracing paper over the crest and trace out the outline of the vinyl layer. Cut that out and transfer it to a new piece of vinyl and then put everything back together. Works very well, you might be able to see some small spots on the edge where the new vinyl doesn't cover the old exactly 100% but its better than having the peeling vinyl.
If you're thinking why can't this be drawn in a computer and cut exactly by a machine. Well, every single crest is slightly different. An exact cutout might work for one crest but won't match anything else. Every crest has to be done from scratch. Also, depending on the year of the jersey, the St. Louis embroidery might be done right on the blue layer of the crest or sometimes it is done on a small rectangle of twill separate from the crest and stitched on. If I'm working on a crest that has the embroidery on the separate piece I can simply take it off and make a new crest from scratch and then just add it on. I'm pretty sure the separate embroidery crests were Starter jerseys only but I might be wrong on that.