I presume this is inspired by this lettering:

http://www.typophile.com/node/67355
http://www.typophile.com/node/78988

Thanks for the links, Justin.

I'm thinking it's a font since the image I posted is from B.A.D.'s "Contact" single from 1989. Whether or not the font is available in digital form is another matter.

If it's from 1989 it's possible they used the iron-on letters to do this design. I've found the http://video on YouTube and Mick's got the M & J on his shirt.

And there's more on the back of it at that can be seen at 2.52.

Sorta, kinda (but not really):
http://emigre.com/fontpage.php?PSabH.html

(Use the lowercase and you'll get most of the way to that "eroded and/or badly autotraced" look.)

Justin, I think you're right that the iron-on letters were used for the cover.

Yeah, it says "MEGATOP PHOENIX" and "B.A.D." on the back of his shirt. There's also this: