As far as I have ever seen you don't put stars on the team badge for championships.
You put the stars on the shirt placed right above the badge.
Very generally, you are correct, Bruce. But the rules on this very widely. Let me elaborate and clarify.
First, most club teams do not put stars on their jerseys for league championships won. This is more of a tradition for national teams when it comes to World Cups won. Uruguay is an exception in that they have 4 stars; two for their WC victories in 1930 and 1950, and two for their Olympic gold medal wins in soccer in 1924 and 1928, when the Olympic soccer tourneys were the highest level of international competition.
The Uruguayans embody another exception in that the stars are actually incorporated into the design of the crest.http://tooextremesports.com/products/uruguay-away-jersey-10-12
As for club teams, the use of stars varies widely in both frequency and symbolism.
In some countries, generally ones where league soccer has existed for a very long time, a star represents 10 league titles won. Some examples would include France, Italy, Egypt, Honduras, Romania, and Malta.
Other countries, many in South America, use a star for every league championship won. This would include such countries as Mexico, Bolivia, Korea and Ecuador.
Most countries do not display championship stars for league titles. These countries include England, Spain, Japan, Russia, The Netherlands, Norway, South Africa, Belgium, and Norway.
In Turkey, a star can be worn for every 5 championships, but some teams don't display them on every year's jersey.
In still other countries, some teams display their championship stars while other don't. In Argentina, for instance (where teams can feature a star for every league championship won), River Plate and Racing don't while Boca Juniors, San Lorenzo and Newell's Old Boys do.
Which brings us to where the stars go. Boca Juniors and San Lorenzo do incorporate their stars into the clubs badge, Newell's Old Boys display them over the badge. Cruz Azul of Mexico incorporates them into the border of the badge, while Chivas Guad has them arranged in a semi-circle under the badge. Bolivar encircles their badge with their championship stars. Penarol doesn't even have their name on their club crest, just their black and yellow stripes and their championship stars.
Sorry to be a downer here, but there is only one true constistancy on the use of championship stars in professional club football. Nowhere in the world do they wear stars for 2nd Division championships.
Well, except Brazil, where the league system and championships have been structured, destructured, restructured and de-restructured so often that teams can put stars on their unies for being "Campeao de Sua Rua" (Champion of their street).
So far, in this country, it's like Argentina. A star per MLS championship, team's option to display.
Seems to me that the pitch is wide open for starting our own tradition on this. Special league championship patch? A small, stylized version of the League Cup? A little black and gold bucky ball? [Poster's note: Tossed that last one in for bq.]
"Let's see some creative suggestions here" encourages
That little old jersey collector