It was paid for by the Mêlée Island Chamber of Commerce.
It was nothing but a T-Shirt.
Guybrush Threepwood had to find it as one of his The Three Trials in order to prove that he was a real pirate. He found it by following directions through the forest in a dance routine that he had bought from the Citizen of Mêlée. The Three Pirate Leaders told him he could keep it because they already had too many.